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Private Insurance Overpayment & Patient Credit Balance Repayment Obligations

January 14, 2021 by  
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Private Insurance Overpayment Must be Returned to Medicare and Medicaid professionals.Most health care providers and suppliers have a solid understanding of their obligation to repay overpayments that may be owed to Medicare, Medicaid and other Federal health benefit plans. [1] Unfortunately, they may not fully understand that overpayments never belong to them, even if the monies are not owed to a government payor. If your practice has identified a private insurance overpayment, you are required to refund the monies to the insurance company.  In this article, we examine the contractual and statutory obligations that a provider or supplier has to return a private insurance overpayment.


I.  Private Insurance Overpayment Obligations Under Your Enrollment Agreement or Contract:

Over the last decade, private payors have become increasingly aggressive in their efforts to detect and deter fraud and other improper billing practices by providers.  Most private payor enrollment agreements or contracts now incorporate a number of program integrity measures.  These include, but are not limited to:

  • Require that participating providers collect co-payments and deductibles.
  • Require that all services billed must be medically necessary, provided in accordance with community standards of care, be properly documented and be accurately coded and billed.
  • Prohibit the provision of improper inducements to patients, referral sources and others.

With respect to overpayments, virtually all private payor contracts affirmatively require that participating providers and suppliers repay any overpayments that are owed to the payor.

II.  Federal Statutory Obligations to Refund Private Insurance Overpayments:

There are several Federal criminal statutes that arguably require you to refund any monies owed to a private health plan.  Depending on the facts in your particular case, a practice’s improper retention of private payor monies could implicate the mail fraud [2] or health care fraud statutes. [3]  If a provider has made any fraudulent misrepresentations or false certifications made to a private payor, the provider’s conduct may constitute a false statement involving a health care program. [4]   While each of the above statutes could conceivably apply if the fact support it, we believe that one Federal statute in particular (18 U.S. Code §669), obligates a health care provider to return overpayments that are owed to a private insurance payor.

18 U.S. Code §669. Theft or embezzlement in connection with health care. [5]

“(a) Whoever knowingly and willfully embezzles, steals, or otherwise without authority converts to the use of any person other than the rightful owner, or intentionally misapplies any of the moneys, funds, securities, premiums, credits, property, or other assets of a health care benefit program, shall be fined under this title or imprisoned not more than 10 years, or both; but if the value of such property does not exceed the sum of $100 the defendant shall be fined under this title or imprisoned not more than one year, or both.”  (emphasis added).

18 U.S. Code §24. Definitions relating to Federal health care offense. [6]

“(b) As used in this title, the term “health care benefit program” means any public or private plan or contract, affecting commerce, under which any medical benefit, item, or service is provided to any individual, and includes any individual or entity who is providing a medical benefit, item, or service for which payment may be made under the plan or contract.” (emphasis added).

III.  State Statutory Obligations to Refund Overpayments:

Several states have enacted specific statutory provisions requiring health care providers and suppliers to repay monies that they were paid but were not owed, to the responsible private payor.  For example:

Mass. Gen. Laws ch. 175H, §2(4). False statements on applications for coverage and claims; failure to disclose. [7]

“(4) having knowledge of the occurrence of any event affecting his initial or continued right to any health care benefit, conceals or fails to disclose such an event with an intent to fraudulently secure such benefit either in a greater amount than is due or when no such benefit is due.  (emphasis added).

IV.  Assuming that a Private Payor Returns a Provider’s Check, Can the Provider Keep It?

In several cases we have seen, when a practice attempted to refund an overpayment to a private payor, the check was returned to the provider and the private payor notified the provider that due to the administrative burden of applying an overpayment to a beneficiary’s account (typically due to the complexity of the payment history), the non-Federal payor had chosen to either “waive” collection of an overpayment or not to cash a check sent by the provider. This also regularly occurs when the identified overpayment owed to a private payor is under a certain amount such as $25.00.

When faced with such a situation, however, providers must review applicable state law to ascertain how an overpayment must be handled. For instance, in Texas, Title 6 of the Property Code requires businesses and other entities holding unclaimed property to turn the property over to the Texas Comptroller’s Office after the appropriate abandonment period has expired. As in most states, violation of these escheat laws can subject a provider to various penalties.

V.  What is a Provider’s Obligation with Respect to a Patient Credit Balance?

Practices regularly identify monies that are owed to a specific patient.  Some practices hold these funds as a credit balance in its books with the intent to apply these funds to any balances that the patient may owe.  Under certain circumstances, such an approach would likely be appropriate. [8] Unfortunately, some health care providers and suppliers are not aware of the reporting requirements in their state with respect to patient credit balances and private insurance overpayments and only learn of their obligations to turn unclaimed property over the State when their practice is subjected to an audit by their State comptroller’s office.  All States have enacted escheat or unclaimed property laws that require companies to exercise due diligence in their efforts to return “property” such as credit balances to their rightful owners. For instance, in Texas, the holder of unclaimed property is required to mail a written notice to the reported owner at their last known address which states that:

“(1) The holder is holding the owner’s property; and

(2) The holder may be required to deliver the property to the Comptroller’s office on or before July 1 if it is not claimed.” [9]

The period of time that a practice can hold onto a patient credit balance or a private insurance overpayment before it must be remitted to the State varies from jurisdiction to jurisdiction.

As a final point in this regard, patient credit balance issues frequently occur when a patient moves and does not tell the provider of his or her new address.  Similarly, when a patient dies, a provider’s written notice of a patient credit balance may go unanswered.  In such a situation, a provider may be able to identify the executor of a patient’s Last Will and Testament and remit the funds to be included in the estate.

VI.  Conclusion:

The lesson to be learned here is quite clear – regardless of who the payor is, an overpayment can rarely, if ever, properly be retained by a provider, regardless of the amount in controversy. In other words – If it doesn’t belong to you, give it back! It’s a simple rule but it is crystal clear—health care providers should promptly return all credit balances and overpayments upon identification.A provider must carefully examine both Federal and State statutes when faced with this issue. The best practice is to return an overpayment to the responsible payor upon identification. In the case of a credit balances owed to a patient, should a provider be unable to locate the patient or find a valid address to return the overpayment (due to a variety of factors), your State’s escheat law must be considered. 


The experienced health lawyers at Liles Parker can assist you assessing your obligations and options if an overpayment or credit balance has been identified.  Need help?  Give us a call for a complimentary consultation.  We can be reached at:  1 (800) 475-1906. 

[1] A detailed discussion of a provider’s obligation to return overpayments owed to the Medicare, Medicaid and other Federal health benefits programs can be found at this link.

[2] Mail and wire fraud (18 U.S.C. § 1341, 1343).

[3] Health care fraud (18 U.S.C. § 1347).

[4] False statements involving health care programs (18 U.S.C. §1035).

[5] Theft or embezzlement in connection with health care (18 U.S. Code §669).

[6] Definitions relating to Federal health care offense (18 U.S. Code §24).

[7] Mass. Gen. Laws Ch. 175H, § 2(4) — False statements on applications for coverage and claims; failure to disclose.

[8] For example, has the practice notified the patient that a credit balance is on his or her account?  Has the patient agreed to allow the credit balance to be applied to amounts that may be owed in connection with future visits?  These questions are important because if the State conducts an audit of a provider’s credit balances, State auditors will be reviewing how long a credit balance has been on account.  Depending on the State, the provider may

[9] A copy of the Texas “Unclaimed Property Quick Start Reporting Guide” can be found at the following link.

Overview of Dental Claims Audits and Investigations by Medicaid and Private Payors in 2019

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Audits of Dental Claims and Dental Fraud Investigations are Increasing.(March 4, 2020):  Many dentists and dental practices around the country are glad that 2019 is behind us.  Last year was a banner year for law enforcement investigators and administrative auditors of dental claims.  Federal and State prosecutors around the country actively pursued both civil and criminal cases against individual dentists for a variety of offenses.  Notably, a number of the defendants prosecuted by the government were first identified as engaged in wrongdoing by Unified Program Integrity Contractors (UPICs) conducting Medicaid dental claims audits and private payor Special Investigative Units (SIUs) reviewing dental claims submitted by a practice for payment.  In this article, we examine the administrative, civil and criminal cases that were brought against dentists in 2019 in order to identify the conduct that led to the imposition of overpayments, the imposition of civil penalties by the government, and in some instances, the criminal prosecution of dentists for various violations of law.

I.   Administrative Dental Claims Audits Expanded in 2019:

  • Medicaid Claims Audits.

Almost a decade ago, the enactment of the Affordable Care Act[1] made it possible for state Medicaid programs to greatly increased their eligibility criteria and the scope of services offered to program beneficiaries. While eligible child enrollees were already receiving dental benefits, in many states, the number of adults qualifying for Medicaid dental benefits doubled. Not surprisingly, as Medicaid dental services have grown, the costs associated with these benefits also greatly expanded.  In response, Federal and State authorities have steadily devoted ever increasing resources to the audit and investigation of improper dental business, coding and billing practices.

The Centers for Medicare and Medicaid Services (CMS) has engaged a number of third-party, UPIC contractors (such as Qlarent, AdvanceMed, the CoventBridge Group, and SafeGuard Services LLC) to perform program integrity audits of Medicaid dental claims around the country.  It is important to keep in mind that UPICs are expressly required to refer suspected cases of fraud and abuse to law enforcement for further investigation and possible prosecution.  UPICs are also required to recommend the revocation of participating providers and suppliers that are non-compliant with Medicare regulations and policies.

Notably, several large private dental management companies, such as DentaQuest and Delta Dental also currently serve as dental plan administrators for various state Medicaid Advantage dental plans around the country.[2]  SIUs at DentaQuest, Delta Dental and other dental plan administrators have implemented a number of measures to identify and investigate instances of suspected fraud or improper dental billing practices.

  • DentaQuest, Delta Dental and Other Private Payor Dental Audits.

DentaQuest, Delta Dental and a number of other payors serve as administrators for private dental plans and various employer-sponsored dental insurance policies around the country.  In 2019,  private dental payors greatly expanded the scope and frequency of audits conducted by their SIUs.  Additionally, these private dental payors greatly increased their use of “prepayment review” and “payment hold” actions, both of which can adversely impact a dental practice’s cash flow and possibly cripple a practice’s ability to operate.

II.   Common Reasons for Denial Cited in Administrative Dental Audits by UPICs, DentaQuest and Delta Dental:

In 2019, the following reasons for denial were commonly cited by UPICs, DentaQuest and Delta Dental in audits we handled:

    • Failure to sign progress notes (either electronically or by hand). At first glance, you may feel that the failure to electronically-sign a dental progress note is a mere technical deficiency. Unfortunately, that isn’t necessarily the case, CMS contractors (such as UPICs) are actively denying dental claims if the associated progress note has not been signed by the rendering dentist. As set out in the Medicaid Program Integrity Manual[3] reflects, unsigned entries (referring to electronic and handwritten), shall be excluded from consideration when performing [a] medical review.”  Similarly, in several of the private dental payors cases that we handled, the payors denied claims that were not supported by signed progress notes and / or orders.  As a final point in this regard, please keep in mind that most State Dental Practice Acts include specific requirements mandating that progress notes, orders and treatment records be signed by the licensed dental professional who performed the service.
    • Billing for dental services not rendered. Unfortunately, this reason for denial has been a recurring theme cited by UPICs and SIUs alike when auditing dental records and claims for many years.  For example, recent private payor audits conducted have alleged that multiple instances were found where dentists billed for periodontal services (CDT Code D4331 – periodontal scaling and root planing) that were not performed based on the auditor’s review of the patient dental treatment records and radiographs in the fileSimilarly, insufficient documentation has been cited when denying these services based on failure to establish medical necessity. In these instances, the auditors noted that in order to diagnose and treat periodontal disease, dated pre-operative diagnostic quality radiographs and pre-operative periodontal charting is needed. Without these, periodontal disease cannot be properly diagnosed and periodontal scaling and root planing should not be conducted.
    • Misrepresentation of a non-covered service. In some respects, this improper practice is nothing more than another form of “billing for services not rendered. Simply put, in the recent cases we have seen where this has occurred, a dentist or dental practice has either purposely or erroneously characterized a non-covered dental service as a covered service. Keep in mind, the definition of a non-covered service varies from policy to policy. Additionally, the list of non-covered services under a specific policy may change from year-to-year. In any event, it is important that dental providers regularly check to ensure that the services being provided qualify for coverage and payment.
    • Misrepresentation of the provider of the dental service. This type of billing error is still commonly found in both dental and medical practices around the country. In the cases we have seen, “fraud” wasn’t the reason for the underlying misrepresentation on the ADA Claims form. In most instances, it was merely a matter of a credentialing delay. In other cases, dental practices appeared to believe that they were permitted to bill for the services under a concept similar to Medicare’s “Incident-To” ruleAlthough we have not seen a dental misrepresentation case of this type referred for criminal prosecution, it is important to remember that the ADA Dental Claims form is being electronically submitted to the health plan for payment.  Depending on the facts, an aggressive prosecutor could argue that such conduct constitutes were fraud. 18 U.S.C. §1343.
    • Unlicensed individuals found to have performed dental procedures. Generally speaking, we have seen two categories of cases where this has occurred. In the first example, a licensed professional failed to renew his Because of this administrative error, the dentist inadvertently performed dental procedures while his license had lapsed.  In the second example, a dental assistant or dental hygienist was found to have performed one or more dental procedures that were outside of their scope of practice. Both of these examples typically lead to claims denials.  They may also result in complaints to the State Dental Board.
    • Routine failure to collect the patient’s full payment or share of cost without notifying the carrier. Is your dental practice consistently collecting co-payments and deductibles that may be owed by a covered beneficiary?  In the case of non-government administered plan, the unsupported waiver of these amounts may constitute a breach of contract. However, if the dental plan is Federally funded, such a failure may constitute a violation of the Anti-Kickback Statute.
    • Misreporting dates to circumvent calendar year maximums or time limitations. The misreporting of dates in an effort to evade calendar year maximums and / or time limitations may constitute a violation of one or more State and Federal fraud statutes.
    • Failure to properly document support for medical necessity. Properly documenting medical necessity continues to be a problem. Over the last year, our reviews have found that there was often little detail provided to support medical necessity of pediatric dental treatments provided. For example, prophylaxis was typically provided because it was medically required. Although dental notes often indicated that plaque was visible, the notes often failed to  specify any areas of build-up. Also, the level of decay was typically not included to support services such as fillings and crowns.
    • Missing dental treatment plans / consent forms. Completed dental treatment plans and consent forms have frequently been found to be missing from patient dental records. The dental treatment plans that were included were typically signed by the pediatric dental patient’s parent, but the signatures were often not dated. Signatures should be dated and these dates should correspond with the date listed as the date of authorization noted on the claim form. Many of the dates of authorization for the “signatures on file” on the claim form were after the date of service, which is an error cited in recent audits.  

 Have you received a request for dental records from a government or private payor?  Take care.  You don’t want to inadvertently turn an administrative or civil audit into a criminal case.  Dental records, progress notes, x-rays and other documents must be signed and dated by the health care provider at the time the services are rendered or conducted.  In conducting your review, did you find that the claims documentation is legible and complete?  If not, change your practices now.  Wholesale efforts to go back and supplement incomplete documentation may constitute obstruction of justice if incorrectly handled.  Never make changes to a patient’s documentation or dental records without first discussing the issues presented with legal counsel so that you can ensure that a third party reviewing the updated records will not be misled as to the nature of the changes or revisions AND when the changes or revisions were made

In other words, your records must accurately show when changes, corrections or additions were made to the patient’s dental records.  Late entries to a record must be dated as such.  More than likely, government and private payor auditors will give very little (if any) credit to late entries or supplemental records unless the service being supplemental was recently performed.   The falsification of information in a patient’s dental record (or in other records presented to the government, its agents or private payor auditors) can constitute a criminal violation and could lead to much bigger troubles for you and your dental practice than a mere overpayment.

III.   Civil Investigations / False Claims Act Dental Cases Brought in 2019:

Last fiscal year, the Federal government won or negotiated over $3 billion in judgments and settlements under the civil False Claims Act. Of the $3 billion in settlements and judgments recovered by the Department of Justice this past fiscal year, $2.6 billion involved the health care industry. It is worth noting that these recoveries only reflect Federal funds, millions of dollars more were also recovered for State Medicaid programs.   Despite the fact that literally billions of dollars were recovered from health care providers and suppliers using the False Claims Act, very few of the settlements and judgments were related to dentists, dental practices and / or dental management companies.  Examples of False Claims Act dental recoveries made in 2019 include:

    • December 2019. In this case, the government alleged that from 2014 through 2015, the defendant dentist presented claims to the State Medicaid program for dental services that were never provided.  Connecticut’s Superior Court ordered the defendant to pay treble damages, along with a civil penalty of $1.5 million.
    • March 2019. In this case dental fraud case, after reviewing a sample of patient dental records, the State Attorney General’s Office found that a dental practice has defrauded the State Medicaid program.  To resolve the allegations, the defendant dentists agreed to pay $1 million under the State False Claims Act and agreed to be voluntarily excluded from participating in the Medicare and Medicaid programs.

 IV.   Criminal Prosecutions of Illegal Dental Business Practices in 2019:

As the case overviews below reflect, both Federal and State prosecutors aggressively prosecuted dentists for their illegal conduct in 2019.  Examples of the criminal prosecutions pursued in dental cases last year include:

    • October 2019.  Virginia.  In this case, a Virginia-licensed dentist was sentenced to nearly eight and a half years in prison for conspiracy to distribute prescription opioids and muscle relaxant pills without a legitimate medical purpose.  The government alleged that the defendant was involved in an elaborate scheme to prescribe opioids such as hydrocodone and oxycodone pills for his personal use and the use of his co-conspirators
    • October 2019. Missouri. Federal prosecutors allege that two dentists at a Missouri dental practice participated in two different schemes to defraud Medicaid.  In the first scheme, patients were allegedly provided a $50 Ortho-Tain mouth pieces designed to straighten teeth but the Medicaid program was then billed $700 for a “speech aid prosthesis.” In the second scheme, federal prosecutors say the dentists provided dentures and other dental services to patients who did not qualify for Medicaid reimbursement and then submitted claims to Medicaid anyway Federal prosecutors say these two schemes netted $885,748.
    • September 2019. Maryland. The dental practice owner (and former dentist) at a Maryland practice agreed to pay over $5.4 million in restitution and nearly $4 million in a forfeiture money judgment after pleading guilty to health care fraud for involvement in a $5 million-plus Medicaid fraud scheme. Authorities said the former dentist (who is currently serving a 16-year sentence for sexual assault of patients), used his dental practices to submit fraudulent claims to D.C. Medicaid for thousands of unprovided provisional crowns, which resulted in around $5.4 million worth of improper payments from the program between August 2012 and February 2016.
    • August 2019. Illinois. An Illinois dentist was indicted on 13 counts of health care and wire fraud after prosecutors say he billed Illinois Medicaid hundreds of thousands of dollars for dental procedures he never performed. The U.S. Attorney’s Office for the Southern District of Illinois stated. In all, it is alleged that Kim collected more than $700,000, which prosecutors want paid back to the state.
    • July 2019. Arkansas.  In the case, an Arkansas dentist received a five-year suspended prison term and was ordered to pay $33,383.05 in restitution, $100,149.15 in damages and $2,500 in fines after pleading guilty to defrauding Medicaid. Authorities said the dentist submitted more than 3,100 fraudulent claims to Medicaid for X-rays and various dental services between September 2015 and December 2017, which resulted in $186,461 worth of improper payments from the program.
    • June 2019. Tennessee.  A Tennessee dentist and practice owner was sentenced to two years and nine months in prison and was ordered to pay $965,448 in restitution after pleading guilty to conspiracy to commit health care fraud for orchestrating a scheme to defraud TennCare and other health care benefit programs. Authorities said the dentist caused the submission of fraudulent claims to TennCare and other health benefit programs for unprovided or incomplete dental work from November 2013 to January 2018.
    • June 2019. California.  A California dentist based out of Los Angeles was sentenced to more than three years in prison for health insurance fraud and was ordered to pay restitution of more than $1.4 million after pleading guilty to submitting fraudulent claims to multiple private insurers for unprovided dental care services.
    • April 2019.  New Jersey.  An unlicensed dentist from New Jersey was convicted in a $2 million fraud case in New York.  The unlicensed dentist was sentenced to two years in prison and ordered to pay restitution of almost $1 million after being convicted for his role in the $2 million health insurance fraud scheme.  Prosecutors allege that the unlicensed dentist worked as a dentist in Manhattan and conspired with others to pay kickbacks to patients and submit fraudulent claims to health insurers for unprovided dental services or services. 

V.   Steps a Dental Practice Can Take to Reduce Regulatory / Statutory Risk:

  • Don’t Ignore a Request for Dental Records from a Medicaid or Private Payor Auditor? 

It has been our experience that a significant portion of all requests for dental records and claims information are either overlooked or ignored by a dental practice.  This error can result in a payor terminating your agreement.   Legal counsel can often intervene on your behalf and obtain an extension of time in which to submit the requested documents. We have seen several cases where a dental practice’s failure to response to the payor’s records request in a timely fashion resulted in the automatic denial of the claims being audited.

  • Implement an Effective Dental Compliance Program.

First and foremost, it is recommended (and if you take Medicaid it is required by law) that you develop and implement an effective Compliance Program.  This would include an aggressive plan to conduct periodic internal audits of your dental claims to ensure that the services have been provided, fully documented, were medically necessary and were coded / billed properly. When was the last time you conducted an internal dental claims audit and examined whether the services you are providing fully reflect medical necessity requirements, are documented to meet the requirements of the payor, and are properly coded and billed? What did you find?  Who conducted the audit, someone from your dental practice, or an outside dental consultant?  Be sure and engage any outside dental consultant through legal counsel.

  • Screen Your Employees, Contractors and Agents Against Available Screening Databases.

Dental providers should screen their applicants, clinical staff, administrative staff, contractors, vendors and agents on a monthly basis.  At this time, there are more than 40 different databases that need to be checked.  These databases include:

(1) List of Excluded Individuals and Entities (LEIE). Maintained by HHS-OIG.
System for Award Management (SAM). Maintained by the General Services Administration.
40 State Medicaid Exclusion Registries. Maintained by either the State Attorney General’s Office or the State Medicaid Fraud Control Unit (MFCU).

Questions regarding your screening obligations?  Call the helpful folks at Exclusion Screening, PLLC with any screening questions.  They can be reached at: 1 (800) 294-0952

  • Call a Qualified Health Law Attorney for Help in Responding to a Dental Audit.

 Hopefully, you won’t face a Medicaid or private payor dental audit in the near future.  If you do, it is essential that you engage qualified legal counsel to guide you through the process.  A knowledgeable, experienced lawyer can interact directly with the payor and work towards a reasonable resolution of the case.  Legal counsel can also provide guidance with respect to payor documentation, coding and billing requirements. Importantly, the Liles Parker attorneys who would represent you and your practice in a dental audit are both experienced health lawyers AND have achieved certification as Certified Medical Reimbursement Specialists (CMRSs) by the American Medical Billing Association (AMBA) and / or Certified Professional Coders (CPCs) by the American Academy of Professional Coders.

Are you facing a dental claims audit or investigation? We can help.  For a free consultation, please call Robert at:  1 (800) 475-1906.

Dental Claims AuditsRobert W. Liles serves as Managing Partner at the health law firm, Liles Parker, Attorneys and Counselors at Law.  Liles Parker attorneys represent health care providers and suppliers around the country in connection with dental claims audits and investigation.  Is your dental practice being audited? Give us a call.  For a free initial consultation regarding your situation, call Robert at: 1 (800) 475-1906.

[1] Signed into law by President Obama on March 23, 2010.

[2] As Medicaid dental rolls have increased, many states have chosen to engage a third-party to administer their Medicaid dental programs, such as Delta Dental or DentaQuest.  At last count, Delta Dental administers dental programs serving more than 80 million Americans, many of whom are participants in a government-sponsored program.  Similarly, DentaQuest administers dental programs serving over 25 million beneficiaries, most of whom are covered by a government-sponsored program.

[3] Medicaid Program Integrity Manual, 1.7.5 “Medical Review for Program Integrity Purposes.”

Individual Liability for Medicare Overpayment Claims

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Medicare overpayments(February 24, 2015): Medicare recently finalized regulations allowing enrollment as a Medicare provider to be denied if any owner or control person of the enrolling provider is affiliated with another provider which owes money to Medicare. These regulations are based on sections of the 2010 Affordable Care Act (ACA). They provide CMS an indirect means to penalize individual owners for unpaid debts owed to Medicare by their provider companies, but are more narrowly written than the ACA requires, and are likely only a 1st step in implementing the screening required by the ACA. Additionally, owners of health care companies with Medicare overpayments also need to consider whether there is individual liability exposure for the company’s Medicare debt.

I.  Background on the Medicare overpayments Individual Liability Issue:

This article is an update of an earlier article on this website addressing individual liability for Medicare overpayment claims, originally published in April 2012. That article examined the liability that individual owners of provider companies can have for Medicare overpayment claims against their providers, and advised that although CMS and Medicare contractors have limited means to collect providers’ overpayment balances from their owners, they may in the future punish the owners indirectly by sanctioning other provider companies they own. Portions of the Workplan published by HHS’s Office of Inspector General in 2011 clearly pointed in that direction.

II.  Recent Development — Issuance of a New Final Rule:

The Secretary of Health, Education and Welfare published a Final Rule[2] amending Medicare Regulations at 42 CFR 405, 424 and 498 effective Feb 3, 2015. The Final Rule conformed closely to the Proposed Rule published April 29, 2013, despite substantial public comment. While this Final Rule included regulation changes on a number of Medicare topics, of interest here is the provision allowing CMS and its contractors to deny enrollment in Medicare programs to a provider if any owner previously owned another provider having unpaid debts owed to Medicare.

III.  Specific Provisions:

Medicare Regulations at 42 CFR 424.530(a)(6) have now been amended to allow CMS to deny a provider or supplier’s enrollment in the Medicare program if

(a)  The enrolling provider or supplier, or any of its owners was previously the owner, directly or indirectly, of another Medicare enrolled provider or supplier;

(b)   The other provider or supplier’s Medicare enrollment has been terminated or revoked;

(c)   The owner left the provider or supplier with the Medicare debt within 1 year before or after that provider or supplier’s enrollment termination or revocation;

(d)    The Medicare debt has not been fully repaid; and

(e)   CMS determines that the uncollected debt poses an undue risk of fraud, waste, or abuse. In making this determination, CMS considers the following factors:

(1) the amount of the Medicare debt;

(2) the length and timeframe that the enrolling provider or supplier or its owner was an owner of the prior entity;

(3) the percentage of the enrolling provider, supplier, or owner’s ownership of the prior entity;

(4) whether the Medicare debt is currently being appealed; and

(5) whether the enrolling provider, supplier, or owner thereof was an owner of the prior entity at the time the Medicare debt was incurred.

A denial of Medicare enrollment under this paragraph can be avoided if the enrolling provider, supplier or owner agrees to a CMS-approved extended repayment schedule for the unpaid debt, or repays it in full.

IV.  Narrowed Scope of New Regulation:

As discussed below, the statutory language authorizing the new regulation targets all owners of providers who are debtors to Medicare. The resulting regulation, however, contains a provision which limits it effect only to certain owners. This is the requirement that the authority to deny enrollment exits only if the owner left the provider or supplier with the Medicare debt within 1 year before or after that provider or supplier’s enrollment termination or revocation. In this context, the verb left means ceased to be an owner. So, if the owner in question divested himself of his ownership more than a year before the Medicare enforcement process terminates the overpaid provider’s enrollment, or keeps his ownership at least a year after termination of enrollment, both of which are plausible circumstances in an overpayment situation, the authority to deny enrollment will not apply. This requirement was not remarked on by the numerous commenters during the proposal period, or otherwise discussed in any CMS releases; and it is unobvious why it was included.

V.  Subjective Element in Regulation:

The 5th element required to authorize denial of enrollment, namely CMS determines that the uncollected debt poses an undue risk of fraud, waste, or abuse is clearly subjective. CMS’s comments in the Final Rule release explain that this is meant to allow enrollment to proceed if the debt or the ownership in the debtor provider are small, or if similar exonerating circumstances exist. These factors are listed in the regulation as subjects of CMS’s subjective consideration without being hard requirements, to allow CMS discretion in the matter. More notably, however, this text tracks the actual authorizing language of the Federal statute quoted below, which phrased the authority as a subjective determination.

VI.  Statutory Authority; Disclosure and Screening Requirements in Statute:

The authority to deny enrollment because of an affiliated provider’s debt to Medicare is part of Section 6401[3] of the Affordable Care Act[4], which requires Medicare providers and suppliers to disclose any current or previous affiliation (directly or indirectly) with those who owe money to Medicare. Specifically, it provides

(A) DISCLOSURE.—A provider of medical or other items or services or supplier who submits an application for enrollment or revalidation of enrollment …shall disclose (in a form and manner and at such time as determined by the Secretary) any current or previous affiliation (directly or indirectly) with a provider … or supplier that has uncollected debt, has been or is subject to a payment suspension under a Federal health care program, has been excluded from participation under [Medicare], the Medicaid program … , or the CHIP program under title XXI, or has had its billing privileges denied or revoked. [emphasis supplied]

Section 6401 authorizes denial of enrollment based on these disclosures with the following language:

(B) AUTHORITY TO DENY ENROLLMENT.—If the Secretary determines that such previous affiliation poses an undue risk of fraud, waste, or abuse, the Secretary may deny such application. Such a denial shall be subject to appeal in accordance with paragraph (7).

In addition to requiring disclosure of affiliated providers with debts to Medicare, Section 6401 also requires Medicare to conduct certain screening of providers and suppliers. The statute does not state what providers and suppliers must be screened for, but merely gives examples. It requires that

Such screening—

(i) shall include a licensure check, which may include such checks across States; and

(ii) may, as the Secretary determines appropriate based on the risk of fraud, waste, and abuse described in the preceding sentence, include—

(a) a criminal background check;

(b) fingerprinting;

(c) unscheduled and unannounced site visits, including pre-enrollment site visits;

(d) database checks (including such checks across States); and

(e) such other screening as the Secretary determines appropriate[5].

Other parts of Section 6401(a)(3) make clear that the screening is to apply to enrolling providers, previously enrolled providers, and during any periodic revalidation of enrollment.

VII.  Affiliated Debt Disclosure via Form 855:

The CMS Final Order release mentions that CMS Form 855 is the form affected by this regulation. This is the multi-use form required to be filed by providers for initial enrollment, to report changes of certain organization information including ownership, to request CMS approval of any change of ownership, to re-validate enrollment or terminate it. Form 855 is the obvious place to require the disclosure mandated by ACA Sec. 6401. As of this writing (February 20, 2015) Form 855 contains no questions about debts owned by other providers and suppliers under common ownership with the signer of the form. Very probably such a question will be added, but even without it CMS could probably rely on its own ability to “connect the dots” between information already called for in this form, and data it has on providers and suppliers which owe it money, to learn of any debts owed by affiliates.

In this regard, the existing language of Form 855 requires that all direct and indirect owners of each provider and supplier be identified by name and Taxpayer Identification Number, or (as applicable) Social Security Number. If the owners are enrolled in Medicare themselves, their NPI and enrollment numbers are required. With this information in CMS’s hands from the enrolling provider or supplier, it must be a simple matter to conduct database searches comparing it with the identifiers of providers and suppliers owing money to Medicare, to determine if any of the enroller’s affiliates are among these debtors. If a connection is established this way, the enrollment denial rules in the regulation could then be applied to deny the enrollment.

VIII.  Practical Application of New Regulation:

As of this writing, there is no public report of any application of the new provisions of 42 CFR §424 to an actual provider enrollment situation, so no one knows how strictly it will be enforced once a debt to Medicare owed by an affiliate of an enrolling provider is identified. Particularly, it is not known how the factors in the subjective 5th element of the new provision will be interpreted, for example, what dollar amounts of affiliate debt, or what ownership percentages in the debtor, will be judged too small to “pose an undue risk of fraud, waste and abuse.” It will also be instructive to learn if such judgments will be made by enrollment contractors or an organ of CMS.

IX.  Future Enforcement Against Owners of Debtors to Medicare:

What is clear is that this new regulation and authority is not the final step in CMS efforts to sanction owners and affiliates of medicare overpayment debtors. Considering the portions of ACA Section 6401 requiring screening of existing as well as enrolling Medicare providers and suppliers, it is likely that future regulations will authorize revocation of enrollment of existing providers and suppliers under common ownership with such debtors. The database searches mentioned above could be conducted on the owner identification information CMS already maintains on its current enrollees, comparing it to the identifiers of providers and suppliers owing Medicare money, to terminate their enrollment when a connection is found, and thus extend Medicare’s efforts to punish owners of debtors to its program. We note that the current-year Work Plan published by CMS’s Office of Inspector General provides, under a section captioned “Provider Eligibility”:

We will determine the extent to which and they way in which CMS and its contractors have implemented enhanced screening procedures for Medicare providers pursuant to the ACA, § 6401[6].

This new regulation, and the clear announcements by CMS officials, suggest that efforts by the agency and its contractors to reach beyond its debtor companies, and sanction their owners and affiliates, will continue.

David Parker Healthcare AttorneyDavid Parker practices in the business transaction and healthcare areas. In the health law area, Mr. Parker represents providers in Medicare, Medicaid, and private payor administrative proceedings involving Medicare Overpayment, revocation and other audit matters, and buyers and sellers in healthcare related transactions. He also gives advice on False Claims Act, Stark, and Anti-Kickback Statute issues.  For a free consultation, call:  1 (800) 475-1906.

[1]. David Parker is a founder and managing member of Liles Parker PLLC, a health care law firm in Washington D.C. Mr. Parker was formerly a partner at Dickstein Shapiro in Washington, DC, and before that the in-house general counsel of Allied Capital, a publicly-traded group of companies in Washington.

[2]. The Final Rule was published Dec 5, 2014 in Vol. 79, No. 234 of the Federal Register at page 72500.

[3]. Now codified at 42 USC §1395cc(j).

[4]. Public Law 111-148 enacted March 23, 2010. It may be noted that the provision of law under discussion was enacted 2 years before this writer’s article predicting it, but like much of that statute, was completely unknown to the writer or the public at the time.

[5]. ACA §6401(a)(3).

[6]. HHS OIG Work Plan, FY 2015, Medicare Program section, pg. 22.

Individual Liability for Medicare Overpayment Claims

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(October 19, 2012): This article addresses the case where an individual or “natural person” owns an interest in a Medicare health care provider which is incorporated[1] under the laws of a state, as a corporation, limited liability company, limited partnership, or  another type of legal person. The individual may be a shareholder, member, limited partner, or some corresponding term for an owner of the company, but in all these cases the common factor is limitation of liability of owners.  Owners of providers facing ZPIC or other Medicare contractor audits or appealing an overpayment demand often ask what risk they face of being held personally liable for the overpayment claims, or otherwise punished personally, if their appeals are unsuccessful.

I.  Hypothetical Case:

The hypothetical situation addressed here is a common one, namely a provider organized as a corporation or LLC (the “Company”) with one or more individual owners (i.e. individual shareholders or members) is enrolled with Medicare, has provided services to Medicare beneficiaries over a substantial period of time, and has received payments from one or more Medicare contractors. Then, a ZPIC or similar contractor selects the Company for post-payment audit. After reviewing a sample of records, the contractor determines that overpayments have occurred and issues an audit results letter assessing an amount claimed to be overpaid in the sample, and an extrapolated (much larger) amount deemed to be overpaid in all of the Company’s Medicare receipts during the period under review. The Medicare Administrative Contractor (the “MAC”) then makes a written formal demand for refund by the Company of the extrapolated amount.

Our hypothetical assumes the Company either fails to appeal the above overpayment determination (referred to as an “Initial Determination”), or appeals and loses. Either way the Company owes the full extrapolated amount to CMS, plus interest from the date of the formal demand by the MAC. Assume further that this sum amounts to several years’ gross revenues for the Company; and it has no means to repay it. The MAC begins recoupment from payments of new Medicare billings by the Company, and the Company shuts down as it exhausts its funds available to cover payroll and operating expenses. Finally, assume (as is commonly the case) that the Company has no significant assets which CMS can seize and liquidate to satisfy the overpayment.

Given the above, the question presented is whether the individual owner or owners of the Company are on the hook for the unpaid amount of the CMS overpayment claim? Are other provider entities owned by the same individuals on the hook? Phrased another way, under what circumstances can CMS or its contractors lawfully collect the above overpayment from the individual owners or their other provider companies? And what other sanctions can the Government apply against the individuals and affiliates in such a case?

II. Concept of Limited Liability:

In the US and most Western legal systems the concept of incorporation of a business is available to shield its owners from claims for the business’s debts. This is the concept of limited liability, meaning the owners’ personal liability for the debts of the business is usually limited to the amount of the capital they have invested in it. If the business owes money to a creditor, the creditor will have recourse to the business, meaning the money and other assets the business itself owns. In this way, the creditor can collect the capital the owner has bound up in the business; but the creditor has no right to make the owner pay from his own assets.

III. Threshold Rule of Limited Liability; Exceptions and “Piercing the Corporate Veil”:

The general rule of limited liability applies to CMS and its contractors when dealing with shareholders of incorporated health care providers, just as it does to other creditors. No statute or case law makes owners of incorporated Medicare health care providers personally liable for their companies’ debts to CMS, except in certain very narrow circumstances which apply to all debtors and creditors. And nothing about the health care industry makes these circumstances more likely to arise than in other industries.

The principal exceptions to the rule of limited liability of shareholders are collectively known as piercing the corporate veil. Under certain circumstances, courts will allow creditors of an insolvent corporation, LLC or other legal entity to reach through the corporate structure and collect their debts from shareholders or similar owners. Numerous factors have been cited by courts to justify imposing liability of shareholders for corporate debts, and an exhaustive discussion of this topic is beyond the scope of this article; but common examples of circumstances which can justify veil piercing are as follow:

(a) Defective Incorporation. Failure to meet legal the statutory requirements for organizing the corporation or LLC can and will result in shareholders being liable for corporate debts. A better statement of this rule is that, without compliance with the requirements for incorporation, no corporation ever exists in the first place to shield the shareholders from liability.

(b) Ignoring the Separateness of the Corporation. Entering into contracts and otherwise transacting business variously in a corporate name and an individual name can justify piercing the corporate veil. Likewise, commingling corporate and individual assets, or transferring assets without formalities between company and owner, or company and sister company, can give the same result.

(c) Significant Undercapitalization. A requirement of incorporation is injecting money or other capital into the new company reasonably sufficient to pay its expected debts. Failure to do this is called undercapitalization, and is grounds to impose liability on the shareholders. The adequacy of capital, however, is judged at the time it is injected, not when the liability arises, and courts tend to defer to any good-faith estimate of how much capital will be needed, so undercapitalization is normally difficult to prove.

(d) Excessive Dividends or Other Payments to Shareholders. When owners are actually working for a corporation they can in most cases pay themselves whatever compensation is even remotely fair, as long as it is clearly characterized as salary or wages. Dividends and other non-compensation distributions, however, are judged very differently, and can safely be taken out by shareholders only to the extent of profits. When shareholders take non-compensation distributions in excess of profits, they constitute a return of capital and can give rise to an undercapitalization claim by any corporate creditor who is subsequently not paid[2]. If such distributions are made when the corporation is actually insolvent, the creditors’ claims against the shareholders will be almost impossible to defend.

(e) Misrepresentation and other Unfair Dealings with Creditors. Dishonesty and false statements to corporate creditors, asset concealment and other deceptive practices, can make shareholders liable for corporate debts.

(f) Absence or Inaccuracy of Records. If corporate records go missing or prove to be inaccurate, they can form a basis to pierce the corporate veil, especially if they hinder a creditor’s collection efforts against the corporation.

(g) Failure to Maintain Ongoing Legal Requirements. Each state’s statutes impose annual franchise fees and various report-filing requirements on corporations and similar entities. Although these have generous grace periods and cure provisions, if they are neglected long enough, the corporation or LLC will legally cease to exist and shareholder liability will result[3].

Given any of the above fact circumstances, CMS and its Medicare contractors can seek to pierce the Company’s corporate veil and collect the overpayment from the Company’s owners in our hypothetical. These circumstances however are not typical for health care providers, and are easily avoided. Veil piercing depends on facts which by their nature are difficult to prove in a court of law, often involve subjective judgments, and in most cases are subject to dispute. The burden of proving the facts is always on the creditor. Correspondingly, courts tend to disfavor veil-piercing claims and narrowly construe the applicable law, so veil piercing has a reputation as a difficult remedy to invoke successfully.

IV.  Rules in Bankruptcy:  

While CMS does enjoy certain advantages and unique rights under US Bankruptcy laws, this doesn’t include any advantage over other creditors in reaching the pockets of shareholders of a bankrupt company.  A basic rule in Bankruptcy is that filing a petition automatically halts or “stays” all acts by creditors to collect debts which pre-date the petition[4]. Since 2005, this “automatic stay” has been ruled not to impair CMS’s right to exclude providers from its programs[5]. Additionally, Federal case law appears to hold that the automatic stay does not prevent CMS and its contractors from recoupment against new Medicare billings by a provider in bankruptcy[6]. But no bankruptcy law gives Government health care programs special debt collection rights against shareholders of providers, so CMS and its contractors, like other creditors, can collect Medicare overpayments from shareholders and other owners of a bankrupt entity only in the Veil Piercing circumstances described above, which are narrowly-drawn and strictly interpreted against the creditor.

V.  Federal Agency Practice on Pursuing Individual Liability: 

Federal agencies are not as a rule aggressive in collection of their debt claims, and CMS is no exception.  For example, in government loan programs where shareholders are required personally to guarantee the debt, once corporate assets are exhausted in default cases, Federal agencies rarely pursue the guarantors’ personal credit, and discourage their contractors and even private holders of Government-guaranteed loans from doing so. With this in mind, it should be no surprise that most Federal agencies seldom if ever seek to pierce any corporate veil[7]. As was noted, veil-piercing involves lots of gray areas and disputed facts and is hard to do successfully; and Government agencies are reluctant to risk the time and money required. Government agencies also fear the adverse publicity that regularly arises from collection efforts against individuals. While Federal authorities could be moved to pursue such remedies in an extreme case or under the glare of unusual publicity, they are otherwise unlikely to do so. In 30+ years of representing participants in Federal programs, I have never been involved in any case where such a remedy was sought against a client or any other individual.

VI. Successor Liability:

In our hypothetical, the individual owners won’t be able to continue in the health care industry using the Company itself as a practice vehicle. They may wish to organize and capitalize another entity to provide the same or a similar type of services. In what circumstances can new entities organized by the owners after the Company’s demise be held liable for the Company’s overpayment obligation? This area of the law is referred to as successor liability, and it provides remedies which do indeed allow creditors to pursue the new entity in some cases. Like veil piercing, this remedy is an exception to the general rule of limited liability of corporate owners, is available to creditors generally in certain narrow circumstances, and is not specific to Government creditors or health care provider debtors.

Simply stated, successor liability flows from state statutes and state court case rulings which allow the creditors of a debtor company to collect their debt claims from another company to which one or more assets of the debtor have been transferred, if it is a successor to the original debtor. The exact circumstances which make the other company a successor vary from state to state. In most states the law gives a list of elements which can establish successor status, but uses a balancing test, meaning there is no hard and fast rule of which or how many elements have to be present to prove the claim. The creditor sues the transferee company to initiate such a claim, and the court hearing the case decides not only which elements are present, but also whether they are enough to make the defendant a successor[8]. But if a creditor can prove enough of them, it can make the transferee pay the debt.

Elements commonly listed to impose liability on the transferee of a debtor’s assets include, (i) common ownership (whole or part) between the original debtor and the separate company; (ii) the transferee was established to hinder the creditors of the debtor; (iii) the original debtor and the transferee company provide the same goods or services; (iv) the same or recognizably similar company name or DBA; (v) same business location; (vi) same customers or customer sources; (vii) same officers or managers; (viii) same employees; and (ix) the transferee pays other debts of the original debtor, or states that it will do so. In most cases, one or two elements alone will usually be insufficient to establish liability[9].

Successor liability is not as uniformly disfavored in courts as is veil piercing, but remains uncommon in practice. Like veil piercing, it is rarely if ever used by Federal agencies and contractors. Whether any specific circumstances will make a transferee company liable as a successor to another is beyond the scope of this article; but asset transfers between commonly-owned companies occur frequently, and many not easily be identifiable as such to a non-lawyer. In our hypothetical, the Company’s owners may be sorely tempted to use the same business location or same employees or managers in the new provider as in the Company, and may wish to have the new entity collect unpaid receiveables. Any of these steps could subject the new entity to the overpayment, or to any other creditor claim. Successor liability can be invoked against pre-existing entities under common ownership with the Company as well. Owners of health care providers having other companies which are subject to any Medicare contractor collection action need to avoid any such transfers scrupulously, and bear in mind that they can make their other provider liable in common for an overpayment claim.

VII.  Other Government Sanctions Against Owners and Affiliates for Non-payment by an Incorporated Provider:

 Pursuing owners personally for repayment of a provider’s overpayment liability isn’t the only sanction CMS and its contractors might logically seek to apply to punish non-payment. Excluding related persons and companies from health care program participation comes to mind. This could take at least 3 forms, each of which we will examine in turn.

(a) Exclusion of Individual Owners. The authority for HHS to exclude both companies and individuals from involvement in its health care programs has been established at the statute, regulation, and policy manual levels.  The basic authority for exclusion is granted to the Secretary of HHS under Sections 1128 and 1156 of the Social Security Act.[10]  These sections list all the grounds for which a party may be excluded[11]. Most of these sections are written so that if an entity commits acts which are grounds for exclusion, the owners are likewise at risk[12]. Most of the grounds for exclusion are not relevant here, such as conviction for felonies, or health care related misdemeanors. Three grounds for exclusion however are listed which relate to providers’ services, namely submitting charges to any Federal health care program in excess of the provider’s usual charges, furnishing services in excess of the needs of patients, and furnishing services of a quality not meeting recognized professional standards[13]. The lack of medical necessity grounds for denial which appear in most overpayment cases, corresponds to the furnishing services in excess of the needs of patients grounds for exclusion. So the question is whether lack of medical necessity of our Company’s services is, in and of itself, valid grounds to exclude it, and therefore also exclude its owners?  These service-related grounds for exclusion are addressed in the Medicare Program Integrity Manual (the “PIM”) in Chapter 4, Sec. 4.19. This section states that in order to prove such cases, the PSC and the ZPIC BI unit shall document a long-standing pattern of care where educational contacts have failed to change the abusive pattern. Isolated instances and statistical samples are not actionable. Medical doctors must be willing to testify.[14]  Only this service-related grounds for exclusion could plausibly be applied to the facts of our overpayment hypothetical, without serious wrongdoing being present beyond simple failure to repay. The contractor documentation in a typical post-payment audit would not appear to satisfy the PIM requirement of “document[ing] a long-standing pattern of care where educational contacts have failed to change the abusive pattern”.  No practitioner at this health care law firm has seen exclusion attempted or threatened against the provider or its owners in a simple overpayment case. Accordingly, exclusion of the provider and its individual owner does not appear to be a substantial risk in our hypothetical situation.

(b)  Bars to Subsequent Applications.  In our hypothetical, the individual owners won’t be able to continue in the health care industry using the Company itself as a practice vehicle. They may wish to organize and capitalize another entity to provide the same or a similar type of services.  If our hypothetical is extended to such a case, what are the risks that CMS and its contractors might punish the Company’s failure to satisfy its proven overpayment demand, by barring the enrollment application of the owner’s new provider entity? In order to bar a new provider owned or controlled by owners of our hypothetical defaulting provider, however, CMS and its contractors must be aware of the relationship between the 2 companies. So our initial inquiry must be whether the new-provider enrollment process will itself call the attention of CMS or its contractors to the relationship between the non-paying Company and the new applicant. This process is largely embodied in the enrollment application document. The current form of Medicare enrollment application for most incorporated providers, CMS-855A (07/11)[15] requires disclosure of any “Adverse Legal Actions/Convictions” of individuals with ownership or control of the entity (in Sec. 6), and so would clearly be required for the Company’s owners in our hypothetical. The listing of adverse adjudications which constitute Adverse Legal Actions/Convictions is at page 16 in the CMS-855A, and includes most criminal convictions, state license and Government program revocations, suspensions, exclusions and debarments, and also 4. Any current[16] Medicare payment suspension under any Medicare billing number.

This form does not require the new applicant’s owner to disclose the problems of the Company in our hypothetical, or even mention its existence, for 2 reasons. First, “payment suspension” is a very specific Medicare sanction, and usually not present in an overpayment demand case. Second, the disclosure is explicitly directed at the individual owner, and its wording does not extend it to other entities under the owner’s ownership or control. The operative text at Section 6 is:

1. Has the individual in Section 6A, under any current or former name or business identity, ever had a final adverse legal action listed on page 16 of this application imposed against him/her?

New program developments in Medicare, however, may change the above situation and extend required disclosures to entities under common ownership or control with new applicants. In the HHS OIG Work Plan for FY 2012, under Part IV: Legal and Investigative Activities Related to Medicare and Medicaid, there is an item captioned Providers and Suppliers with Currently Not Collectible Debt.

VIII.  Conclusion:

In sum, the established legal rule of limited liability of owners of incorporated businesses appears to be alive and well in the Medicare service provider area, and Federal agencies and their contractors by and large respect it. The separateness of legally-distinct incorporated businesses under common ownership also remains in effect. These rules however have significant exceptions.

Owners of incorporated health care provider entities, absent some written agreement to the contrary, are insulated from personal liability for overpayment obligations owed by their companies to Federal health care authorities by the same state laws which insulate them from their companies’ other debts. Generally, Federal health care laws do not change these rules. If your company’s assets are insufficient to satisfy its debts, procedures exist for Federal claimants (like other creditors) to try to reach through your company and pursue your personal credit to satisfy their claims. But this requires a lawsuit to be filed against you personally; and the laws of the states specify only certain narrow circumstances where they can be successful. Accordingly, creditors rarely try to “pierce the corporate veil”, and this is probably more true of Federal creditors than private ones.

The most likely situation where an insolvent provider’s creditor can successfully reach the personal credit of the owner is when the owner has taken dividends and other sums from the company which cannot be characterized as salary or compensation for employment, at times when the debtor company was already insolvent. Likewise, the most likely way a new provider company being organized by an existing provider’s owner can become liable to its creditors is for assets to be transferred from the old provider to the new. Owners of multiple providers should consult legal counsel to examine all dealings between them for successor liability and similar issues whenever one provider becomes liable for overpayments, because many risk-creating activities will not be recognizable as such without legal training.

Apart from debt collection risks, procedures exist for HHS to exclude owners of providers from Federal programs, which will operate to exclude other provider entities under common ownership. The available grounds for exclusion, however, do not normally arise in an overpayment case. Similarly, HHS regulations provide for the revocation of the enrollment of health care providers in certain cases. The grounds for revocation do not include a defaulted overpayment by a separate provider under common control.

The main area of risk for the affiliates of a defaulting provider subject to an overpayment appears to be the enrollment application by a new provider entity under common ownership. While the strict wording of the current enrollment application forms does not compel disclosure of the overpayment situation in our hypothetical, and  overpayment by a commonly-owned provider is not currently a listed basis for denial of the new enrollment, in practice the existence of a defaulted overpayment obligation poses a substantial risk to any related party’s enrollment. Initiatives are under way inside HHS which could change these risks to certainties.

Healthcare LawyerDavid Parker is an attorney practicing at Liles Parker PLLC, a health care and business law firm in Washington D.C. Mr. Parker was formerly a partner at Dickstein Shapiro in Washington, DC. Before entering private practice, Mr. Parker served for 16 years as the in-house general counsel of Allied Capital, a publicly-traded group of mezzanine finance companies headquartered in Washington. For more information, contact David at (202) 298-8750.

[1] The term incorporated will be used here to refer to the legal process of creating any form of legal entity providing limited liability to its owners (e.g. limited partnerships and LLCs) not just to the creation of a corporation.

[2] This practice is harder to defend than a claim for initial undercapitalization, because in this case there is evidence that at the time of organization, the owners believed the capital later taken out was needed in the business.

[3] Failure to hold annual meetings, and failure to keep corporate minutes have seldom been the basis for shareholder liability.

[4]. 11 U.S.C. §362.

[5]  11 USC §362(b)(28)

[6]  See In re Slater Health Center, Inc. 398 F.3d 98 (C.A. 1 2005). The US Bankruptcy Code does not explicitly address recoupment, and the Slater ruling may not apply in all circumstances. Among other things, its application turns on the overpayment and the new billing being part of the “same transaction.” Otherwise, the contractor’s claim against the new billing is a setoff which is specifically addressed in the Code and is generally halted in bankruptcy by the automatic stay. See for example In re University Medical Center 973 F.2d 1065 (C.A.3 1992).

[7] The notable exception to this rule is the Internal Revenue Service’s pursuit of shareholders to collect corporate tax liability. The IRS has in recent years successfully pierced the corporate veil in a number of well-publicized cases.

[8] See e.g. Cab-Tek v. E.B.M. Inc. 153 Vt. 432 (Vt. 1990).

[9] Typical statements of states’ successor liability rules can be found in Marks v. Minn Mining & Mfg. Co 187 Cal. App. 3d 1429 (Cal. Ct. App. 1986) and Sweatland v. Park Corp 587 NYS 2d 54 (App. Div. 1992).

[10] Codified in 42 USC §§1320a-7 and 1320c-5

[11] A convenient chart provided by HHS summarizing the various grounds on which exclusion from Federal health care programs may be based, can be found here.

[12] The recurring text appears, for example, in 42 USC §1320a-7(b)(6). That section provides that the Secretary of HHS may exclude “Any individual or entity that the Secretary determines… has furnished or caused to be furnished … items or services to patients substantially in excess of the needs of such patients….” Since owners of a provider entity are normally in control of it, if the entity has done the described act, the owner can be said to have caused the act, and is therefore subject to the same grounds for exclusion [emphasis added].

[13] 42 USC §1320a-7(b)6)

[14]  PIM Ch. 4 Sec. 4.19.2. Similar procedural requirements for exclusion appear at and

[15] Other versions of CMS-855 (used for other types of providers and entities) contain sections corresponding to Sections 6, page 16 and Section 15 of CMS-855A, discussed herein.

[16] Sec. 15 of CMS-855A extends the required disclosure to all subsequent periods, effectively making it an Evergreen requirement.

[17] For example, CMS-855 program application forms have long required owners of all applicants to be identified by name and Social Security Number. A simple cross-checking of these identifiers against identifiers of owners from the CMS-855 of defaulting debtors could easily be implemented.

[18] Grounds for denial of enrollment are repeated, but not expanded, in the Medicare Program Integrity Manual in Chapter 15.8.

[19] 42 CFR §424.530(2).

[20] 42 CFR §424.530(6). The regulation defining the term owner includes holders of 5% and greater ownership interests. Grounds for denial of enrollment based on payment suspension are set forth in nearly identical language in §424.530(7)

[21] See 42 CFR §424.535. Note that this revocation regulation includes a grounds for revocation corresponding to §424.530(a)(2) [felony conviction, debarment or suspension by the provide, its owner or key personnel] but no grounds for revocation corresponding to §424.530(a)(6) [existing overpayment by the provider or its owner].

What are a Dentist’s Medicaid Overpayment Obligations? Part I

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Medicaid Dental Overpayment

(April 24, 2012): While considerable attention has been paid to the Affordable Care Act (generally referred to as “Health Care Reform”) and its requirement that “identified overpayments” be promptly repaid to the government, it is important to keep in mind that this repayment obligation is not new – it has long been firmly in place.  Moreover, it applies to all health care providers, including dentists, orthodontists, and their outside billing companies. An identified dental overpayment must be repaid.

I.  Handling a Medicaid Dental Overpayment:

As a review of the 1998 “Third Party Billing Company” Compliance Program Guidance issued by the Department of Health and Human Services, Office of Inspector General (HHS-OIG) in the Federal Register reflects, “[f]ailure to repay overpayments within a reasonable period of time could be interpreted as an intentional attempt to conceal the overpayment from the government, thereby establishing an independent basis for a criminal violation.” (63 Fed. Reg. 70138 (Dec. 18, 1998)).

As this guidance clearly reflects, the government has long considered the failure of providers to return Medicare overpayments, Medicaid overpayments and overpayments made by other Federally-funded health plans to be a serious concern.  Unfortunately, many dental practices appear to have been unaware of this requirement.  We have seen situations where an identified dental overpayment was not actively worked, thereby placing the practice in peril.

Notably, there are also criminal prohibitions against the purposeful concealment and / or failure to disclose a Medicaid dental overpayment to the government.  As 42 U.S.C. §1320a-7b(a)(3) states, “Whoever, having knowledge of the occurrence of any event affecting his initial or continued right to any such benefit or payment . . . conceals or fails to disclose such an event with an intent fraudulently to secure such benefit or payment either in a greater amount than is due or when no such benefit or payment is authorized [is a criminal violation].”

Unfortunately, our review of dental practices has found that most dentists do not have an effective Compliance Plan in place. As a result, few dental practices conduct periodic internal billing reviews.  Moreover, even fewer dental practices have engaged outside legal counsel or consultants to examine their coding and billing practices. The dental community has been relatively quiet on this issue, to the detriment of dentists who are now finding their practices under investigation.

II.  Handling Private Party Overpayments:

In addition to Federally-funded payor plans, Texas dental practices also have an obligation to repay an identified dental overpayment made by a private payor.  Under 18 U.S.C. § 669, it is a violation to “knowingly and willfully” embezzle, steal or otherwise without authority convert or intentionally misapply the monies, funds or assets of a health benefits program. (emphasis added).

As this statutory provision reflects, this obligation covers all payor types, Federal and private.  Therefore, dental practices are obligated by Federal (and possibly State) law to return a dental overpayment or incorrect payment to a private payor.  In all likelihood, your contractual agreement with the private payor imposes repayment deadlines and other requirements.

As a final point in this section, it is essential to keep in mind that a dental overpayment does not belong to you, even if a private payor tells you to keep it.  For example, if upon receiving a dental overpayment check from you, a private payor might say, “We are returning your check — it would be an administrative nightmare for us to allocate this ‘overpayment’ properly to the dates of service in our system.” As set out below, virtually no dental overpayment belongs (or can be retained) by a dentist’s office.

III. Handling “Unclaimed” Overpayments:

As discussed, any and all overpayments made to a dental practice by Medicaid, a private insurance payor, or a patient, must be promptly returned to their rightful owner.

Nevertheless, it is quite common for some overpayments to be returned to a dental office, either because a patient has moved, died or failed to claim their mail, or a private insurance company refused to accept the check because it would take too much administrative work to allocate the funds appropriately.

In such situations, it essential to keep in mind that every State has passed laws governing the State’s right to “Unclaimed Property and Funds.”  Literally every state has “Escheat” and / or “Unclaimed Property” laws which cover such overpayments.[1] For instance, in Texas:

The [Texas] unclaimed property law requires financial institutions, businesses, and government entities to report to the state, personal property they are holding that is considered abandoned or unclaimed.

The Texas Comptroller of Public Accounts is responsible for administering the Texas Unclaimed Property Program. Property is turned over to the Comptroller’s office annually when the owner’s whereabouts are unknown and the property has been inactive on the books of the reporting company after the appropriate abandonment period has expired.

Should you fail to report and turn over overpayments held by your dental practice, you may be subject to significant penalties if you are audited.  As you can imagine, many States are aggressively audited companies in today’s poor economy in an effort to bolster their sagging treasuries.

IV. Deadlines for Returning a Medicaid Dental Overpayment – Prior to Health Care Reform:

Long before passage of the Affordable Care Act, the Centers for Medicare & Medicaid Services (CMS) had issued proposed rules in the Federal Register indicating that an overpayment must be returned to the government within 60 days of identification.  As the Federal Register noted, health care providers must, within 60 days of identifying or learning of the excess payment, return the overpayment to the appropriate intermediary and carrier, at the correct address, and notify the intermediary and carrier, in writing, of the reason for the overpayment.  (emphasis added) (67 Fed. Reg. 3662 (January 25, 2002)).

In the preamble to the proposed rule, CMS has implied that failure to report overpayments in accordance with the proposed rules might be a criminal violation of Section 1128B(a)(3) of the Social Security Act.

V.  Impact of Affordable Care Act:

Among its various provisions, the Affordable Care Act legislation made it crystal clear that the knowing retention of an identified overpayment constitutes a violation of the False Claims Act.  As the revised statutory provision states:

(d) Reporting and Returning of Overpayments.

(1) If a person has received an overpayment, the person shall—(A) report and return the overpayment to the Secretary, the State, an intermediary, a carrier, or a contractor, as appropriate, at the correct address; and (B) notify the Secretary, State, intermediary, carrier, or contractor to whom the overpayment was returned in writing of the reason for the overpayment.

(2) … An overpayment must be reported and returned under paragraph (1) by the later of—(A) the date which is 60 days after the date on which the overpayment was identified; or (B) the date any corresponding cost report is due, if applicable.

(3) Enforcement. Any overpayment retained by a person after the deadline for reporting and returning the overpayment under paragraph (2) is an obligation (as defined in section 3729(b)(3) of title 31, United States Code) for purposes of section 3729 of such title. (emphasis added)(See 42 U.S.C. 1320a-7k)

Importantly, under Sec. 6402 of the Affordable Care Act, the term “overpayment” was expressly defined by its drafters to include both Medicare and Medicaid payments to which health care providers (such as a dental practice) are not entitled:

. . . any funds that a person receives or retains under title XVIII [Medicare] or XIX [Medicaid] to which the person, after applicable reconciliation, is not entitled under such title. (emphasis added).

Healthcare LawyerLiles Parker is a full-service health law firm focusing on regulatory compliance and representing providers in health law and business matters. Our attorneys are highly skilled in designing and implementing effective Compliance Plans for dental practices, orthodontic practices, and other health care providers. Moreover, our attorneys are experienced in handling an array of complex health law matters, including the appeal of alleged overpayments to Medicaid and disclosure and repayment of an identified dental overpayment.  For more information on how we can assist your practice in developing an effective dental compliance plan, call Robert W. Liles, Esq. Robert is a Managing Partner at the Firm and can be reached at 1 (800) 475-1906. Call him today for a free consultation.

[1] For a list of all State “Unclaimed Property” websites see:


Providers Should Exercise Caution When Handling Overpayments — More Than Likely, You Can’t Keep It, Even if the Payor Doesn’t Want it Back!

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Providers Must Exercise Caution When Handling Medicare overpayments(July 15, 2010): When handling Medicare overpayments, providers must exercise caution.  Since the May 2009 passage of the Fraud Enforcement and Recovery Act (FERA) and subsequent enactment of the Affordable Care Act (ACA), we’ve heard a lot about how the government looks at Medicare overpayments and how providers should handle them.  Prior to the clarification and statutory reinforcement of the “overpayment” issue provided under the ACA, a number of providers have mistakenly believed that in the absence of a direct demand for repayment, an identified overpayment would belong to the provider.  Notably, this issue is not new.  In fact, the recent enacted provisions have merely reinforced the government’s long-standing position that a provider has a responsibility to voluntarily refund Medicare overpayments without an overpayment determination being made by the government.

I. The Rules on Handling Medicare Overpayments Have Been in Place a Long Time:

As you will recall, the agreement to return any overpayments is fundamental to a provider’s eligibility to participate in the Medicare program.  Section 1866(a)(1)(C) of the Social Security Act (42 U.S.C. § 1395cc) requires participating providers to furnish information about payments made to them and to refund any monies incorrectly paid.  Implemented in 2006, the Medicare Credit Balance Report (CMS-838) is designed to ensure timely compliance with this obligation.

Secondly, ACA Section 6402 echoes the requirements of CMS’ 2002 proposed rule that providers “must, within 60 days of identifying or learning of the excess payment, return the overpayment to the appropriate intermediary and carrier, at the correct address, and notify the intermediary and carrier, in writing, of the reason for the overpayment.”  (67 Fed. Reg. 3662 (January 25, 2002)).  A conservative reading of that proposed rule arguably suggested that HHS-OIG’s voluntary disclosure protocol may not be “voluntary” after all but a mandatory repayment may be required.  Thus, the government has long sought to clarify when, not if, overpayment refunds would be required.

Despite the publicity resulting from PPACA and its FCA implications, it is important to remember that this issue was addressed over a decade ago.  As set out in the 1998 holding in United States v. Yale University School of Medicine, Civil Action No. 3:97CV02023 (D.Conn.), the government intervened in a qui tam and obtained $1.2 million settlement based on alleged FCA violations for failing to return credit balances.  In summary, providers who fail to promptly (within 60 days of identification) return an overpayment to the government do so at their own peril.

II.  Handling Non-Federal Overpayments:

As an aside, even if the overpayment at issue is not owed to a Federal payor (such as Medicare or Medicaid), it is imperative to remember that virtually no overpayments belong to a provider.  In the case of non-Federal payors (such as a private insurance company), we are aware of numerous instances where the non-Federal payor has notified the provider that due to the administrative burden of applying an overpayment to a beneficiary’s account (typically due to the complexity of the payment history), the non-Federal payor has chosen to either “waive” collection of an overpayment or not to cash a check sent by the provider.  This also regularly occurs when the identified overpayment is under a certain amount (such as $25.00).  When faced with such a situation, a provider must review applicable State law to ascertain how an overpayment must be handled.  For instance, in Texas, Title 6 of the Property Code requires businesses and other entities holding unclaimed property to turn the property over to the Texas Comptroller’s Office after the appropriate abandonment period has expired.  As in most States, violation of these escheat laws can subject a provider to various penalties.

III. Conclusion:

The lesson to be learned here is quite clear – regardless of who the payor is, an overpayment can rarely, if ever, properly be retained by a provider, regardless of the amount in controversy.  A provider must carefully examine both Federal and State statutes when faced with this issue.  The best practice is to return an overpayment to the payor (Federal, State, or private patient), regardless of the amount, upon identification.  Should a provider be unable to identify who is owed an overpayment or cannot locate a valid address to return the overpayment (due to a variety of factors), your State’s escheat law must be considered.

This can be a complicated issue, especially when a large overpayment has been identified and it is owed to a Federal payor.  While time is of the essence, it is strongly recommended that you contact your legal counsel as soon as it appears that a potential large or complicated Federal overpayment has been found.  Your attorney can help guide you through this complex process.

Read more on Medicare Overpayments

Health Care AttorneyShould you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one our other attorneys at 1 (800) 475-1906.

Our initial discussion with Health Care Providers is complimentary

May 21, 2018 by  
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We prefer to have a complimentary Initial Discussion with you regarding your concerns before you choose to engage us as your counsel. This way you will b e able to make an informed decision as to whether we are good fit for you. Simply call 202-298-8750 and ask to speak to the attorney of your choice or ask for Attorney “Ish” our Client Intake Attorney

The initial consultation is always free.

Liles Parker is a DC-based Law Firm Primarily Representing Health Care Providers and Suppliers Nationwide in Medicare, Medicaid and Private Payor Audits, Investigations & Revocation Actions. Our team includes Attorneys who are Former Federal Prosecutors, Certified Billers as well as Coders, and Compliance Officers.

At Liles Parker, we understand that extraordinary legal representation begins with talented, committed attorneys. Over the years, Liles Parker attorneys have been recognized for their work in a variety of areas, including corporate governance, business transactions, Medicare, Medicaid and private overpayment audits and appeals and civil and criminal litigation.

Our attorneys apply decades of focused experience and expertise in the representation of firm clients. In doing so, we have established national reputations in the areas of regulatory compliance, health care Law and corporate transactions. Our attorneys are often asked to speak at national conferences on a wide variety of topics.

One of our founders, Robert Liles was was asked to serve as the FIRST National Health Care Fraud Coordinator for the entire USA and was later promoted to the position of Deputy Director, Legal Programs, for the Executive Office for U.S. Attorneys (EOUSA), a component of the United States Department of Justice (DOJ).

Our philosophy is simple — Your success is our success. We will always work aggressively to safeguard your financial interests, and in some cases your personal liberty. We strive to provide quality, innovative representation in as cost-effective manner as possible.

Robert W. Liles, J.D., M.B.A., M.S.

January 25, 2021 by  
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Robert W. Liles is a Health Law Attorney at Liles Parker. Call 1 (800) 475-1906 for a Free Consultation.
Managing Member
Office: (202) 298-8750
Facsimile: (202) 337-5804

He has been peer rated for high professional achievement in 2020Robert Liles has been rated "AV" by Martindale-HubbellNamed one of "America's Most Honored Lawyers"Robert Liles has been named a "Top-Rated Lawyer for 2020"Robert Liles has been named a "Top Attorney" by AVVO

Robert W. Liles — Practice Concentration and Experience:

Robert W. Liles has worked in regulatory compliance as a Federal prosecutor and as defense counsel, for more than 25 years. This has provided a unique perspective on the challenges faced by clients in highly regulated industries such as health care, banking and finance. Mr. Liles focuses his practice on fraud defense, internal audits, investigations, compliance and regulatory matters. He has represented both individuals and entities in administrative, civil and criminal proceedings.

Mr. Liles first began working in hospital management after receiving both an M.B.A. and an M.S. in Health Care Administration.  After graduating from law school, he was hired as an Assistant United States Attorney (AUSA) in the Southern District of Texas (SDTX) where he primarily handled False Claims Act cases.  He was later promoted to Chief,  Financial Litigation Unit.

Shortly after the passage of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), Mr. Liles was asked to serve as our country’s first National Health Care Fraud Coordinator.He was detailed to Washington, DC and was later promoted to the position of Deputy Director, Legal Programs, for the Executive Office for U.S. Attorneys (EOUSA), a component of the United States Department of Justice (DOJ).  While at EOUSA, he advised Federal prosecutors around the country on civil and criminal fraud statutes, schemes, investigative tools, privacy concerns, and compliance issues. He was instrumental in writing and implementing DOJ guidance on the judicious use of the False Claims Act.  Notably, while a Federal prosecutor, Mr. Liles was asked by the Office of Inspector General (OIG) to travel overseas and train Ukrainian prosecutors and investigators on health care fraud and abuse issues.  Mr. Liles also regularly taught OIG agents and investigators at the Federal Law Enforcement Training Center (FLETC), on Jekyll Island.

Mr. Liles’s health care management education / background and his prior experience as a Federal prosecutor provide a real-world perspective when advising individuals and entities on enforcement and regulatory compliance issues.

Financial / Regulatory Matters Handled:

  • Managed our team in an investigation and document production responding to a subpoena directed to a large, international bank, by the Department of Treasury, Office of Foreign Asset Control (OFAC).
  • Managed our production team’s efforts in responding to a subpoena for documents by the Securities and Exchange Commission (SEC) that was directed to our client, a U.S. bank.
  • Represented bank officer and defended his deposition by the Office of the Comptroller of the Currency (OCC).
  • Represented large international bank in a False Claims Act case.

Health Care Regulatory Matters Handled:

  • Represented multiple health care providers in Medicare revocation cases where CMS had revoked the provider’s billing privileges.
  • Represented licensed health care professionals in State Licensing Board proceedings.
  • Represented multiple entities in connection with UPIC and ZPIC audits, and investigations by OIG.
  • Worked with a variety of providers and suppliers to develop and implement an effective Compliance Plan.  Conducted training for staff on statutory and regulatory requirements to be followed.
  • Reviewed and challenged the validity of the statistical methodology used to extrapolate alleged damages in audit cases of Medicare, Medicaid and private payor medical, home health, DME and dental claims.
  • Directed the internal audit of non-profit corporate operations, policies and procedures to better ensure statutory and regulatory compliance.
  • Conducted internal investigation of alleged malfeasance of corporate employees.  Provided recommendations for the implementation of safeguards to better prevent improper employee conduct.
  • Worked with corporate clients to properly incorporate privacy provisions into the client’s overall effective compliance strategy.
  • Provided assessment and advice to corporate clients on proposed business models, addressing both the prohibition against improper self-referrals, Federal and State Anti-Kickback Act concerns, and violations of False Claims Act provisions.
  • Represented individuals and entities in ongoing litigation under the False Claims Act, addressing concerns raised by DOJ and State prosecutors.
  • Managed large document productions on behalf of corporate clients in response to Grand Jury, DOJ and Federal agency subpoenas. Advised investors and investment companies with respect to health care sector issues and the possible impact of health care fraud enforcement activities.
  • Served as Independent Review Organization (IRO) in connection with multiple Corporate Integrity Agreements (CIAs) between the OIG and Medicare providers.


  • South Texas College of Law, Houston, Texas (J.D.)
  • Trinity University, San Antonio, Texas (M.S. in Health Care Administration)
  • Trinity University, San Antonio, Texas (Master’s in Business Administration)
  • University of the South, Sewanee, Tennessee (B.A. in Economics)


  • Certified Professional Coder (CPC)
  • Certified Medical Compliance Officer (CMCO)

Professional Affiliations:

  • Member, American Health Lawyers Association
  • Member, National Association of Criminal Defense Lawyers
  • Member, American Association of Professional Coders
  • Member, National Alliance of Medical Auditing Specialists
  • Member, American College of Legal Medicine
  • Member, Christian Trial Lawyers Association
  • Compliance Counsel, American Medical Billing Association
  • Compliance Counsel, American Association of Clinical Endocrinologists
  • Faculty Instructor, Practice Management Institute

Recent Awards:

  • Top Attorneys — Washington, DC (as published in the “Washington Lawyer“)(May 2020).
  • Rated “AV Preeminent” Highest Possible Peer Review Rating in Legal Ability and Ethical Standards (2003 — 2021).
  • Rated “10.0,” AVVO’s Highest Rating for Attorneys. (2021)
  • America’s Most Honored Professionals:  Top 1% (2017-2021
  • ).
  • Top Rated Lawyers in Washington, DC & Baltimore (as Published in the Wall Street Journal — Based on Martindale-Hubbell Ratings)(December 2015).
  • Rated “Super Lawyer” (2020 — 2021).

Federal Admissions:

  • U.S. Supreme Court
  • District of Columbia District Court
  • Maryland District Court
  • Texas Northern District Court
  • Texas Southern District/Bankruptcy Court
  • Texas Western District Court

State Admissions:

  • District of Columbia
  • State of Texas

Presentations and Speaking Engagements (Partial Listing):

  • National Webinar, American Medical Billing Association (AMBA) “What’s the Difference Between an OIG Exclusion and a CMS Preclusion?”  (2021).
  • National Webinar, American Medical Billing Association (AMBA). “10 Steps You Can Take to Improve Your Compliance Efforts in 2021″ (2021).
  • National Webinar, Texas Association of Home Care and Hospice (TAHCH).  Problems and Pitfalls With Home Health and Hospice EHR Systems — Address These Software Deficiencies Now, Before it is Too Late!”  (2020).
  • National Webinar, American Medical Billing Association (AMBA).  Compliance Pitfalls With Physician Practice EHR Systems — Deficiencies You Must Address Now!”  (2020).
  • National Webinar, Texas Association of Home Care and Hospice (TAHCH).  “An Overview of the CMS Preclusion List”  (2020).
  • Practice Management Institute, Abilene TX. “Compliance Officer Certification Course” (2020).
  • National Webinar, National Alliance of Medical Auditing Specialists (NAMAS). “Structuring an Effective Compliance Program:  The Ins and Outs of How to Ensure You Are On the Right Track.”  (2020).
  • National Webinar, National Alliance of Medical Auditing Specialists (NAMAS). “I Have an Excluded Employee — What Should I Do?” (2020).
  • G2:  Lab Reimbursement Summit 2019, Charlotte, NC.  “Government Enforcement Efforts Targeting Labs:  Are Your Marketing Practices Compliant with the Law.”  (2019).
  • American Association of Orthopedic Executives (AAOE), Arlington, VA. “Regulatory Enforcement Actions: Compliance Issues Impacting Orthopedics.” (2019).
  • Florida Behavioral Health Conference, Orlando, FL.  “Government Enforcement Efforts Targeting Substance Abuse Treatment Clinics — Are Your Marketing Practices Compliant with EKRA and Other Applicable Laws?”  (2019).
  • National Webinar, American Association of Clinical Endocrinologists. “EKRA, the Anti-Kickback Statute and State All-Payor Laws — Steps Your Endocrinology Practice Should Take to Stay Out of Trouble.”  (2019).
  • West Coast Symposium on Addictive Disorders (WCSAD), La Quita, CA.  “Enforcement and Regulatory Risks Facing CEOs, Managers and Physicians of Addiction Medicine Clinics.” (2019).
  • Annual Conference — American Alliance of Orthopedic Executives (AAOE), Nashville, TN. Regulatory Risk Areas Facing Orthopedic Practices in 2019.”  (2019).
  • Annual Conference, American Association of Professional Coders (AAPC), Las Vegas, NV. Potential Liability of Coders and Billers in a Health Care Fraud Case.” (2019).
  • National Webinar, Liles Parker.  “Top 10 Steps You Can Take to Improve Compliance and Stay Out of Trouble with the Government — Parts 1 and 2.”  (2019).
  • DHR Health — Partnership Meeting, Edinburg, TX.  An Overview of Current Health Care Fraud Enforcement Efforts – Steps You Can Take to Improve Compliance and Stay Out of Trouble.”  (2019).
  • National Webinar, Exclusion Screening, “Exclusions Screening of Vendors and Contractors — Who Should You Screen?”  (2019).
  • National Webinar, American Medical Billing Association (AMBA).  Third-Party Billing Agreements: Does Your Contract Protect Your Interests? Is it in Violation of Federal or State Requirements?” (2019).
  • Endocrine University: American Association of Clinical Endocrinologists (AACE).  Mayo Clinic, Rochester, MN.  “The Business of Medicine.”  (2019).
  • American College of Legal Medicine, 11th Annual Ethical and Legal Aspects of Dentistry, Los Angeles, CA.  Current Audit and Government Enforcement Efforts Against Dentists and Dental Practices.”(2019).
  • National Webinar.  Exclusion Screening. Disclosure Risks When Enrolling in Medicare and Medicaid.”(2019).
  • National Webinar, National Alliance of Medical Auditing Specialists (NAMAS). “2019 OIG Work Plan Update.”  (2019).
  • Annual Conference, Cape Cod Symposium on Addictive Disorders (CCSAD), Hyannis, MA. Enforcement and Regulatory Risks Facing CEOs, Managers and Physicians of Addiction Medicine Clinics.” (2018)
  • Annual Conference (AOA-36), Association of Otolaryngology Administrators, New Orleans, LA, “Health Care Employment Law Update. From Marijuana to Sexual Harassment.” (2018).
  • National Webinar, American College of Clinical Endocrinologists, “Endocrinologist Considerations When Negotiating a New Employment Contract AND When Leaving a Job.” (2018).
  • AAPC Alexandria, VA Chapter Conference, “Regulatory and Enforcement Risks to be Addressed by Professional Coders.”  (2018).
  • Annual Conference, American College Health Association, Washington, DC, “Workplace Violence in College Health Care Clinics.” (2018).
  • National Webinar, Exclusion Screening, Top Regulatory and Billing Risks Facing Dentists and Dental Practices.” (2018).
  • Quality & Compliance Conference, Home Care Alliance of Massachusetts, Worchester, MA, “ADRs, Prepayment Reviews, Post-Payment Audits and Suspensions – Navigating Medicare’s Administrative Appeal Process.” (2018).
  • Annual Retreat, Washington, DC, “The Criminalization of Pain. The Investigation and Prosecution of Physicians, Nurse Practitioners and Dentists based on Their Opioid Prescribing Practices.” (2018).
  • National Webinar, Exclusion Screening, “History and Current Status of Health Care Regulatory Enforcement Efforts.” (2018).
  • Endocrine University, American Association of Clinical Endocrinologists, Rochester, MN, “The Business of Medicine.”  (2018).
  • Annual Conference, American College of Legal Medicine, Charleston, SC, Top Regulatory and Billing Risks Facing Dentists and Dental Practices.(2018). 
  • National Conference, National Alliance of Medical Auditing Specialists, Orlando, FL, “Enforcement Efforts for 2018: What You Can Do to Prepare for the Upcoming Changes in Laws & Statutes.” (2017).
  • Annual Conference (AOA-35) , Association of Otolaryngology Administrators, Las Vegas, NV, “Emergency Preparedness and Workplace Violence.” (2017).
  • National Conference, National Alliance of Medical Auditing Specialists, Orlando FL, “History & Current Status of Healthcare Compliance Requirements.” (2017).
  • National Conference, American Medical Billing Association, Las Vegas, NV, “Vital Billing Contract Terms for Billers and Health Care Providers.” (2017).
  • National Conference, The Business of Pain Medicine, “IPM Compliance.” (2017).
  • National Webinar, American Association of Healthcare Administrative Management, “Effective Compliance Plans — How is Law Enforcement Evaluating Your Efforts?” (2017).
  • New Directions in Home Care & Hospice Conference, Dixon Healthcare Solutions, Las Vegas NV, “New Developments in Regulatory and Judiciary Enforcement of Home Health Agencies.” (2017).
  • National Webinar, American Medical Billing Association, “Employer Scrutiny and Screening for Current and New Employees and Providers.” (2017).
  • National Webinar, Texas Association for Home Care and Hospice, “Employer Scrutiny and Screening for Current and New Employees and Providers.” (2017).
  • Annual Conference, West Virginia State Medical Association, Charleston WV, “Employment Law and the Medical Practice. What are the Risks Facing Your Practice.”  (2017).
  • Annual Conference, West Virginia State Medical Association, Charleston WV, “ADRs, Prepayment Reviews, Postpayment Audits, Suspensions and Revocations – The Impact of these Administrative Enforcement Tools on a Physician Practice.” (2017).
  • National Webinar, Texas Association for Home Care and Hospice, “Reading the Tea Leaves – What are the Top Ten Risks Your Home Health Agency will Face in 2016.” (2016).
  • National Webinar, Texas Association for Home Care and Hospice, “Employer Scrutiny and Screening for Current and New Employees and Providers” (2016).
  • National Webinar, Texas Association for Home Care and Hospice, “Pre-Claim Reviews – Is Your Agency Prepared?” (2016).
  • National Conference, Practice Management Institute, Las Vegas NV, “Compliance and Ethics in the Medical Practice.” (2016).
  • National Conference, Practice Management Institute, Las Vegas NV, “Workplace Violence in the Medical Practice.” (2016).
  • National Conference, National Alliance of Medical Auditing Specialists, Orlando FL Attorney-Client Privilege: Issues to be Considered by Health Care Providers.”  (2016).
  • National Conference, National Alliance of Medical Auditing Specialists, Orlando FL, “What is Your Liability? As the Auditor and Compliance Officer What Role do You Play in Your Day-to-Day Operations?”  (2016).
  • National Conference, National Alliance of Medical Auditing Specialists, Orlando FL, “Developing a Voluntary Disclosure and Refund Policy.” (2016).
  • National Conference, National Alliance of Medical Auditing Specialists, Orlando FL, “Repercussions and Penalties of Non-Compliance. The Potential Price Tag of Not Having a Compliance Plan.” (2016).
  • National Conference, American Medical Billing Association, Las Vegas NV, “The Liles Report: An Update on Compliance.” (2016).
  • National Conference, Professional Association of Health Care Office Management (PAHCOM), Clearwater Beach FL “Reading the Tea Leaves – How Does 2017 Look for Health Care Providers?” (2016).
  • National Conference, American Medical Billing Association, Las Vegas NV, “Rules for Billers in Compliance.” (2016).
  • National Webinar, National Alliance of Medical Auditing Specialists, “The FY 2017 OIG Work Plan: What Should You Expect.”  (2016).
  • National Conference, Association of Otolaryngology Administrators, Chicago IL, “What are the Top 10 Regulatory Risks Your Practice will Face in the Next Year?” (2016).
  • National Conference, Association of Otolaryngology Administrators, Chicago IL, “Professional Courtesy, Discounts and Waivers – When are they Permissible? When are they Likely Illegals?” (2016).
  • National Webinar, Texas Association for Home Care and Hospice, “Home Health Pre-Claim Demonstration Review Project & New HHS-OIG Home Health Audits on the Horizon.” (2016).
  • National Conference, Practice Management Institute, Las Vegas NV, “Compliance and Ethics in the Medical Practice.” (2016).
  • National Webinar, Practice Management Institute, “Compliance News Update.” (2016).
  • National Webinar, American Medical Billing Association, Third-Party Billing Agreements – Does Your Contract Protect Your Interests?” (2016).
  • National Conference, Practice Management Institute, New Orleans LA, “Compliance and Ethics in the Medical Practice.” (2016).
  • National Conference, Practice Management Institute, New Orleans LA, “HHS-OIG Fraud Efforts & Physician Compensation.” (2016).
  • 16th Annual Health Care Business Summit, MedAssets, Las Vegas NV “Regulatory Risks:  The Anti-Kickback Statute, Stark and the False Claims Act”  (2016).
  • Long Term Care and the Law, American Health Lawyers Association, Orlando FL “Tactical Approaches to Claim Audits and Recovery Risks in Home Health and Hospice”  (2016).
  • 15th Annual National Medical Billing Conference, American Medical Billing Association, Las Vegas NV “Provider Exclusions, HIPAA Changes and Legal Issues with ICD-10” (2015).
  • Cutting Edge Home Health Leadership Summit, Dixon Healthcare Solutions, Maui HI, “Defending Your Medicare and Other Government Claims” (2015).
  • West Virginia State Medical Association — Winter Conference, Charleston WV, “Physician Compliance Challenges – Regulatory Risks Areas to be Considered by Your Practice” (2015).
  • Private Duty Conference, Dixon Healthcare Solutions, Las Vegas NV, “Understanding HIPAA and other Privacy Issues Affecting Your Private Duty Agency” (2015).
  • National Conference, Practice Management Institute, San Antonio TX, “Compliance and the Physician Practice: A Glimpse of the Future” (2015).
  • National Webinar Series, Exclusion Screening “Don’t Forget, The OIG Is Not the Only Game in Town!” (2015).
  • National Webinar Series, American Medical Billing Association, “Using an Overseas Billing Company and /or Using the Cloud to Store Your Data: What are the Risks and Benefits of these Practices?” (2015).
  • Home Health Conference, Dixon Healthcare Solutions, Las Vegas NV, “Employment Law Issues Impacting Home Health Agencies” (2015).
  • Home Health Conference, Dixon Healthcare Solutions, Las Vegas NV “Preparing and Responding to Various Medicare Claims Audits” (2015).
  • Doctor’s at Renaissance Conference Center, Edinburg TX, “South Texas Takedown — How to Stay within the Four Corners of the Law” (2015).
  • APPNA, Arlington VA, “Top 10 Steps You Can Take to Improve Compliance and Stay Out of Trouble with the Government” (2015).
  • Private Duty Conference, Texas Association of Home Care and Hospice, San Antonio TX, “Risky Business. . . Avoiding Legal Pitfalls to Protect Your Business and Bottom Line” (2014).
  • Regulatory Educational Group Services, McAllen TX, “Top 10 Steps You Can Take to Improve Compliance and Stay Out of Trouble with the Government” (2014).
  • NSCHBC Annual Conference – San Juan PR, “Be Careful Before Moving to Cloud Computing: A Contrarian View of the Inevitable” (2014).
  • NAMAS Annual Conference, Ashville NC, “Enhanced Provider Exclusion Rules and the Impact on Your Screening Obligations” (2014).
  • NAMAS Annual Conference, Ashville NC, “When to Disclose – Legal Obligations and Options” (2014).
  • Fall Conference — Jefferson IPA, Dallas TX, “Risky Business: Avoiding Program Integrity Pitfalls Currently Facing Your Health Care Practice” (2014).
  • National Webinar Series, Practice Management Institute, “Human Resource / Employee Relations Risks” (2014).
  • National Webinar Series, American Medical Billing Association, “Identifying Risks and Modifying Your Compliance Plan to Take These Risks Into Account” (2014).
  • Rio Grande Valley Healthcare Fraud and Compliance Conference, McAllen TX, “Overview of Health Care Compliance and Relevant Statutory Provisions Now Facing South Texas Providers” (2013).
  • Physician Practice Conference & Annual Business Meeting, West Virginia Medical Association, Charleston WV, “Red Hot Compliance Update — 2013” (2013).
  • National Conference, Practice Management Institute, New Orleans, LA, “Conducting a Gap Analysis: Turning the Lights On in Your Practice.” (2013).
  • National Webinar Series, American Medical Billing Association, “Social Media Concerns for Providers and Billers” (2012).
  • National Webinar Series, American Medical Billing Association, “HIPAA, HITECH and Emerging Risk Areas for 2012” (2012).
  • Fifth Annual Medical Coding Conference, Coding Con, Orlando FL, “Building an Effective Anesthesia Compliance Program” (2012).
  • Revenue Cycle Management 2011, Decision Health, Atlanta GA, “Responding to Unannounced Audits” (2011).
  • Annual Conference, Practice Management Institute, San Antonio TX, “Federal Compliance Panel Addresses Compliance Risks” (2011).
  • National Webinar Series, Practice Management Institute, “Reading the Tea Leaves — Issues of Concern Covered in HHS-OIG’s 2012 Workplan” 2011.
  • National Webinar Series, American Medical Billing Association, “Returning Overpayments to the Government” (2011).
  • National Webinar Series, Decision Health, “What to do When the Auditor Knocks” (2011).
  • Medical Coding, Billing and National Conference, CodingCon, Las Vegas NV, “Impact of Healthcare Reform on Healthcare Entities” (2011).
  • Annual Conference, American Medical Billing Association, Las Vegas NV, “Third-Party Billing Company Compliance Concerns” (2011).
  • Practice Management Institute, Dallas TX, “Compliance Officer Certification Course” (2011).
  • Practice Management Institute, Las Vegas NV, “Compliance Officer Certification Course” (2011).
  • Practice Management Institute, San Diego CA, “Compliance Officer Certification Course” (2011).
  • Practice Management Institute, Alexandria VA, “Compliance Officer Certification Course” (2011).
  • National Webinar Series, American Medical Billing Association, “Health Care Reform and Third-Party Billers“(2010).
  • South Texas Home Health Conference, The Forum, McAllen TX, “Responding to ZPIC Audits and Investigations” (2010).
  • Annual Conference, Practice Management Institute, San Antonio TX “Medicaid Integrity Contractors: The Newest Challenge Faced by Providers” (2010).
  • Annual Conference, Practice Management Institute, San Antonio TX, “Responding to an Audit by Medicaid Integrity Contractor” (2010).
  • Webinar, Rocky Mountain Chapter – American Medical Billing Association, “Current Issues Facing Third-Party Billing Companies” (2009).
  • Annual Convention, Practice Management Institute, Las Vegas NV, “Medicare Audits: How to Respond to a RAC Review” (2009).
  • 9th Annual AMBA National Conference, Las Vegas NV, “RAC, PSC and ZPIC Audits — How to Respond if Your Practice is Audited” (2009).
  • 21st Annual PAHCOM Conference, Phoenix AZ, “Current Risks Faced by Physician Practices” (2009).
  • National Conference, Practice Management Institute, San Antonio TX, “Responding to PSC and RAC Audits” (2009).
  • Medical Billing and User Conference, CodingCon, Orlando FL, “Issues Facing Third-Party Billing Companies” (2009).
  • National Conference, Practice Management Institute, Las Vegas NV, “A New Breed CMS Auditor: PSCs and RACs” (2008).
  • Regional Conference, Practice Management Institute, Anaheim CA, “A New Breed of CMS Contractors: PSCs and RACs” (2008).
  • Regional Conference, Decision Health, Atlanta GA, “Keynote Speaker: Post-Election Legislative Initiatives” (2008).
  • Regional Conference, Decision Health, Atlanta GA, “Provider-Vendor Relationships: How to Stay on the Right Side of the Red Line” (2008).
  • Fall Health Care Conference, Practice Management Institute, San Antonio TX, “RACs and PSCs: Addressing Audits by CMS Contractors” (2008).
  • Central Illinois Chapter Meeting, American Medical Billing Association, Chicago IL, “Issues Facing Third-Party Companies” (2008).
  • National Conference, American Medical Billing Association, Las Vegas NV, “Issues Facing Third-Party Billing Companies” (2008).
  • Semmelweis Annual Conference, Washington, DC, “History and Current Status of the False Claims Act” (2007).
  • Annual Convention, Medical Association of Billers, Las Vegas, NV, “Compliance Violations and Penalties” (2007).
  • Chapter Conference for Medical Office Professionals, American Medical Billing Association, Largo, MD, “Health Care Fraud: Audits and Investigations” (2007).
  • Semmelweis Society Annual Conference — Washington, DC, “Bad Faith Peer Review Concerns” (2006).
  • Prosecuting Chiropractic Fraud Cases, NCHAA, Harrisburg, PA, “Chiropractic Fraud Issues” (2006).
  • Health Care Fraud Issues Faced by Medical Group Managers, MGMA, Washington, DC, “Health Care Fraud Update” (2006).
  • Annual Conference, American Medical Billing Association, Las Vegas, NV, “Keynote Speaker: Health Care Compliance” (2006).
  • Medical Practice Coding & Compliance Summit, Practice Management Institute, San Antonio TX “Health Care Fraud: Issues and Concerns from a Legal Perspective” (2006).
  • Intensive Session in Trial Advocacy Skills, National Institute of Trial Advocacy, Washington DC, “Trial Advocacy Skills” (2003).
  • Health Privacy, American Academy of Pediatric Dentistry, “HIPAA Privacy: An Essential Element of an Effective Compliance Strategy” (2003).
  • Webinar, Ohio Hospital Association, “Handling Overpayments — Selected Issues and Considerations“(2003).
  • Intensive Session in Trial Advocacy Skills, National Institute of Trial Advocacy, Washington DC, “Trial Advocacy Skills” (2002).
  • Trinity University and the Greater San Antonio Hospital Council, San Antonio TX, “How to Respond to a Federal Investigation of Your Hospital or Medical Practice” (2002).
  • Greater New York Chapter of the American Corporate Counsel Association, New York NY, “How to Respond to a Federal Investigation of Your Company“ (2002).
  • Member Teleconference, Ohio Hospital Association, “New Leadership: What to Expect from DOJ and HHS-OIG” (2001).
  • Health Care Fraud Enforcement Issues and Considerations, Georgia Podiatric Association, Atlanta GA, “2001 Podiatric Coding & Practice Management Summit” (2001).
  • Member Teleconference, Healthcare Financial Management Association, “Health Care Fraud Enforcement Efforts This Year and Beyond“(2001).
  • Annual Meeting: Legislative Update, Academy of Managed Care Pharmacies, San Antonio TX, “Pharmaceutical Legislative Initiatives” (2001).
  • Ukrainian Prosecutors and Interior Ministry of Interior Law Enforcement Officials, Sponsored by the Department of Health and Human Services, Office of Inspector General, Kharkov Ukraine, “Civil and Criminal Health Care Fraud Enforcement” (multiple sessions covering various aspects of this topic)(2000).
  • Evaluator Team Leader Training, Executive Office for U.S. Attorneys, “Priority Prosecution Areas” (2000).
  • ABA Health Care Fraud Conference, “Priority Prosecution Areas” (2000).
  • Midwest Regional Nursing Home Fraud and Abuse Conference, Chicago IL, “Moderator, Nursing Fraud and Abuse Enforcement Panel” (1999).
  • Basic Health Care Fraud Enforcement, Federal Law Enforcement Training Center (FLETC), Glynco GA, “Civil & Criminal Health Care Fraud Statutes” (1999).
  • Advanced Health Care Fraud, National Advocacy Center, Executive Office for U.S. Attorneys, Columbia SC,  “Qui Tams” (1999).
  • National Level Health Care Fraud Working Group, Executive Office for U.S. Attorneys, Columbia SC, “False Claims Act and National Project Developments” (1998)
  • National Civil Chiefs Seminar, National Advocacy Center, Executive Office for U.S. Attorneys, Columbia SC, “Use of the False Claims Act in Civil Health Care Matters” (1998).
  • Basic Affirmative Civil Enforcement Seminar, Executive Office for U.S. Attorneys, Columbia SC, “Use of the False Claims Act” (1998).
  • Texas Statewide Financial Litigation Conference, San Antonio TX, “Health Care Fraud Collection Issues” (1997).
  • Basic Health Care Fraud Prosecution Team Training, Executive Office for U.S. Attorneys, Washington DC, “Investigative Techniques & Issues” (1997).
  • Affirmative Civil Enforcement, Executive Office for U.S. Attorneys, Washington DC, “Role of Auditors & Investigators” (1997).

CERT Audits

January 21, 2021 by  
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In 1996, the Department of Health and Human Services (HHS), Office of Inspector General (OIG) first estimate the improper payment error rate of Medicare Fee-For-Service (FFS) claims. [1]  From 1996 through 2002, OIG continued to manage this program. In 2002, the Improper Payments Information Act (IPIA) was enacted.[2] Under the IPIA, Federal agencies, including HHS are required to conduct an annual review of programs it administers to reduce and recover improper payments. In response to the IPA, the Centers for Medicare and Medicaid Services (CMS) began publishing its estimates of improper payment rates. These efforts became known as the “Comprehensive Error Rate Testing” (CERT) program.[3]

I. Current Status of the CERT Audit Program:

The CERT audit program was designed to comply with the Payment Integrity Information Act of 2019 (PIIA).[4]  It provides a comprehensive assessment of the improper payments being made to specific types of Medicare providers, along with the improper payment decisions being made by various Medicare contractors. Approximately 50,000 FFS claims are reviewed each year by CERT auditors. The claims reviewed include those that have been paid or denied by Medicare Administrative Contractors (MACs).

On March 30, 2020, CMS suspended the performance of most prepayment and post-payment audit activities. CERT audits were also placed on hold.  Last August, CMS instructed its CERT contractors to resume their audit activities.

II. Providers are Randomly Chosen for a CERT Audit:

With one exception, virtually none of the Medicare claims audits initiated by CMS contractors are truly “random,” despite whatever a Unified Program Integrity Contractor (UPIC) or Recovery Audit Contractor (RAC) may tell a health care provider.  There is one narrow exception to this basic rule – CERT audits.  A CERT audit is conducted as part of the CERT program.  Simply stated, the objective of a CERT audit is to estimate the accuracy of the Medicare Fee-For-Service (FFS) program. When a CERT audit is conducted, the CERT auditor is essentially “auditing” a specific previously-paid type of claim to determine whether a Medicare Administrative Contractor (MAC) was correct in allowing the claim to be paid.  To accomplish this, the CERT auditor pulls sample of specific paid services submitted for payment in a MAC region.  Providers with claims in the sample universe are then randomly pulled by the CERT auditor.  The bottom line is that the focus of a CERT audit is the claim at issue, not the provider.

III.   Types of CERT Contractor:

Prior to September 2016, CMS utilized several private contractors to administer the CERT program. Effective October 16, 2016, CMS structured the CERT program so that it could be administered by two contractors. As currently designed, the program involves two contractor components – a “CERT Statistical Contractor” (CERT SC) and a “CERT Review Contractor” (CERT RC).

The Lewin Group currently serves as the CERT SC and is responsible for designing how claims are sampled and calculating improper payment rates. It is important to keep in mind that sampled claims are selected by the CERT SC based on the specific type of claim being audited. The sample of claims identified for audit are NOT selected based on a specific provider or supplier.

NCI Information Systems, Inc. (NCI), currently serves as the CERT RC. Once a sample of claims has been identified by the CERT SC, the list is provided to the CERT RC. The CERT RC is then responsible for requesting the supporting medical records associated with this sample of claims from health care providers and suppliers. Once the provider or supplier returns the requested medical records to the CERT RC, the CERT RC is then responsible for reviewing the sampled records to determine if the claims were properly paid by the MAC. The CERT audit process proceeds as follows:


Generally, the responsibilities assigned to each of these contractor components include:[5]

CERT Graph

A.   CERT SC duties.

Based on the risk issues identified, the CERT SC is responsible for selecting a sample of claims (both paid and unpaid) that have been processed by one or more MACs. The listing of claims are then forwarded to the CERT RC for handling.

B.   CERT RC duties.

When serving as a CERT RC, the CMS contractor typically proceeds as follows when completing its duties:

  • If a provider or supplier submitted one or more of the claims included in the sample pulled by the CERT SC, the CERT RC will contact the provider or supplier by letter to request copies of the medical documentation associated with the claim(s). On day 25, the CERT RC will typically contact the provider or supplier by phone to check on the status of their documentation
  • If a provider has not forwarded the documents requested to the CERT RC by day 30, a second letter is normally sent to the provider or
  • If the records are not received by day 45, the CERT RC will send a third letter to the provider or supplier to ascertain the status of the requested documentation. On day 55 the CERT RC normally tries to contact the provider or supplier by phone to check on the status of the documentation
  • If the requested documentation still has not been received by day 60, a fourth letter is sent to the provider or supplier, again inquiring on the status of the missing
  • If no documentation is received by day 76, the claims associated with the missing documentation are denied and scored as an “error” based on the missing

IV.  Improper Payment Error Categories, Definitions and Examples:

 The reasons for payment denial typically cited by a CERT RC contractor include the following:[6]


V.  Responding to a CERT Audit:

Should you receive a CERT audit request for documents, it is important to keep in mind that your practice or clinic is not being accused of fraud or wrongdoing. Fundamentally, a CERT audit is primarily designed to identify deficiencies and mistakes made by MACs.  Upon receipt of a CERT audit request, a Medicare provider or supplier should carefully review the request and take steps to assemble a complete set of documentation covering the specific claims at issue. Importantly, if you are dealing with notes that are difficult to decipher, it is recommended that a transcription of the notes be made and submitted with the documentation.

VI.  Appealing CERT Denials:

The results of a CERT audit are likely to be set out in Medicare’s electronic Fiscal Intermediary Standard System (FISS). It is imperative that you monitor the status of the claims selected for CERT review. If the CERT RC finds that one of more of your paid claims did not qualify for coverage and payment, you will have to decide whether or not you agree with the denial decision that has been issued. Should you dispute the denial, you will need to file for administrative appeal within the established timeframes.

VII.   Recommendations:

Overall, a CERT audit is perhaps the most benign of any Medicare claims audit.  Nevertheless, it is highly advisable that you exercise caution when responding to a CERT audit.  The results of a CERT audit are used by the OIG, Unified Program Integrity Contractors (UPICs), Supplemental Medical Review Contractors (SMRCs) and Recovery Audit Contractors (RACs) for targeting purposes.  Upon receipt of a CERT audit document request, we recommend that you contact an experienced health lawyer for guidance.  Effectively handling a CERT audit may very well reduce the likelihood of a later, more serious audit of your Medicare claims.

NATIONWIDE REPRESENTATION — Call for Free Consultation:  1 (800) 475-1906

If your practice or health care organization is placed on targeted for a CERT review or audit, you need to understand the collateral impact of the CERT audit findings. Contact Liles Parker to discuss the CERT audit process and how to best respond to a request for documentation.  A number of Liles Parker’s experienced health lawyers are also “Certified Professional Coders” and / or “Certified Medical Reimbursement Specialists.”   Give us a call for a complimentary consultation.  We can be reached at:  1 (800) 475-1906.

[1] The definition of what constitutes an improper payment is quite broad. Both overpayments and underpayments are considered to be improper payments.  Improper payments also include:

  • Payments to an ineligible recipient
  • Payments for an ineligible service
  • Duplicate payments
  • Payments for services not received
  • Payments for an incorrect amount

[2] A copy of the “Improper Payments Information Act of 2002” can be found at this link.

3 Guidance regarding the CERT program can be found at https://www.cms.gov/Research-Statistics-Data-and- Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/CERT/

[4] A copy of the “Payment Integrity Information Act of 2019” can be found at this link.

[5] This chart can be found at: https://certprovider.admedcorp.com/Home/About

[6] A copy of this chart was included in a presentation by CMS on the CERT program. It may be found at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS- Compliance-Programs/CERT/Downloads/IntroductiontoComprehensiveErrorRateTesting.pdf


Chiropractor Owned Multidisciplinary Practices are at a Higher Risk of Audit

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Chiropractor Owned Multidisciplinary Practices are Being Audited by UPICs(January 13, 2021):  Over the last few years, we have noted a significant increase in the number of audits initiated against Chiropractor owned multidisciplinary practices.  Typically, these integrated medical practices and clinics employ at least one Chiropractor (typically in an ownership or managerial capacity), along with multiple Doctors of Medicine (MDs), Doctors of Osteopathy (DOs). Physician-extenders such as Nurse Practitioners (NPs) and Physician Assistants (PAs) are also commonly employed in these multidisciplinary practices and clinics.

The purpose of this article is to examine Chiropractor owned multidisciplinary practices which employ MDs, DOs and physician extenders in order to provide a wide range of care and treatment services.  While there are a number of benefits to such a model, both State regulatory entities and Federally-contracted Unified Program Integrity Contractors (UPICs) working for the Centers for Medicare and Medicaid services (CMS) have shown their concern regarding these organizations.  Depending on the jurisdiction, a number of State regulatory entities have questioned the appropriateness of the model itself.  UPICs and other CMS Medicare contractors have initiated (or, in some cases, are in the process of initiating) a review or audit of various claims submitted to Medicare for coverage and payment.

I. Why have Chiropractors Worked to Integrate Other Medical Services Into Their Practice?

While you may disagree, it has been our observation that many Chiropractors have an entrepreneurial spirit.  This has manifested itself in a growing number of Chiropractor owned multidisciplinary practices which provide health care services other than merely those associated with chiropractic care.  Depending on the State, integrating other medical services into a chiropractic practice isn’t always easy – there are often a number of statutory and / or regulatory barriers to be overcome. Examples of the Chiropractor owned multidisciplinary practices we have recently seen have included:

  • Pain management clinics.
  • Multidisciplinary clinics which also offer complimentary and alternative medicine therapy options.
  • Industrial medicine clinics (often focusing on Workman’s Compensation cases).
  • Orthopedic clinics focusing on back injuries, spinal compression problems and victims of automobile accidents.

Chiropractic practices choosing to transition over to a multidisciplinary model have often found that they are better equipped to address the health problems of their patients.  This is often due to the fact that an integrated DC / MD practice typically greatly expands the scope of care and treatment services available to patients. This multidisciplinary approach provides patients with a convenient one-stop care and treatment option.

From a financial standpoint, Chiropractor owned multidisciplinary practices have also found that this business model opens up a number of previously-unavailable opportunities.  As you are aware, only a few chiropractic services qualify for coverage and payment under Medicare.  While private payor plans typically cover a somewhat wider scope of services, many Chiropractors have essentially built their business on cash-pay patients.  The addition of MDs, DOs and physician extenders has permitted integrated practices to expand their scope of medically-reimbursable services, many of which now qualify for coverage and payment by Medicare and  private payor programs.  While there are both patient-care and financial benefits to the integrated, multi-disciplinary model, there are also a number of challenges you should consider prior to setting up this type of practice or clinic.

II.  Challenges to be Considered:

A.     State Regulatory Considerations.

Depending on the State, it may be illegal for anyone other than a medical physician to own a medical practice.  For example, many jurisdictions still prohibit the “Corporate Practice of Medicine.” In such States, it is illegal for a corporation to practice medicine.  Moreover, a corporation cannot employ a physician to provide medical care and treatment services.

Although every State is different, if your State prohibits the Corporate Practice of Medicine, it may be against the law for a corporation or for a non-physician individual (including a Chiropractor) to own or control a physician practice or clinic which provides professional physician services.  Therefore, we strongly recommend that prior to setting up a Chiropractor-owned, multidisciplinary practice or clinic, you should contact a qualified health lawyer to assist you maneuvering through the myriad statutory and regulatory requirements governing this complex area of law.  As a final point in this regard, should you choose to set up an integrated practice or clinic, it is essential that you have a full understanding of both your State’s Chiropractic Practice Act and the Medical Practice Act governing the physicians you intend to employ.

B.    Current Audit Challenges.

Over the last few years, many providers, including Chiropractor owned multidisciplinary practices, have been advised that their claims are being placed on prepayment review or that their prior-paid claims are being be subjected to a postpayment audit by a UPIC, such as Qlarant, Safeguard Services or CoventBridge. [1]  Most of these CMS program integrity contractor audit actions have been generated as a result of data-mining.  Other reasons for audit and / or review have included: patient complaints, competitor complaints and referrals from State Medical Boards.  Regardless of the reason for audit, if your integrated practice or clinic is audited, it is essential that you engage qualified health law counsel to advise you on your options for responding to an inquiry by a UPIC.  For a detailed discussion of the current UPIC audit environment, please see our article titled “A UPIC Audit is Serious Business — Is Your Office Prepared?”  [2]

Prepayment Reviews: Unlike postpayment overpayment assessments, there is not an effective administrative overpayment process for health care providers placed on prepayment review.  We recommend that you consult with legal counsel if your practice is placed on prepayment review.  There are three points to keep in mind in such cases:

  • It is often in your best interest to continue to submit claims for review and not hold them.  Even if they are denied, at least you can initiate the postpayment appeals process as soon as possible and hopefully begin to restore cash flow;
  • It is often helpful to engage qualified health law counsel to review your claims and generate a report that can be sent to the UPIC, pointing out that the claims do, in fact, qualify for coverage and payment.
  • Think outside of the box—no provider can survive on prepayment review over a long period if a significant portion of their payor mix is Medicare.  Contact your health law counsel to discuss possible options for seeking remedial action to have the prepayment review lifted.

Postpayment Audits: Over the last decade, program integrity contractors (such as UPICs) have aggressively pursued alleged Medicare overpayments from Chiropractors, Physicians and other health care providers around the country.  Specific actions taken have included:

  • Using statistical sampling and extrapolation.While the Medicare Program Integrity Manual sets out the basic requirements for a UPIC to conduct a statistical sampling, these contractors have been known to have deviated from the sampling methodologies proscribed by CMS.
  • UPIC reviews have often alleged significant claims coverage concerns.Identified error rates of 100% by UPICs are not uncommon.  They then seek a full refund of all claims submitted by an individual provide.
  • Multiple errors often identified. Due to the massive amount of minute technical requirements imposed on providers, UPICs are often able to identify and allege multiple technical and substantive errors in many of the claims which they review.

Medicare Revocation Actions:Over the last year, we have seen a sharp increase in the number of Medicare revocation actions taken.  The reasons for revocation have varied but have typically been associated with alleged violations of a health care provider’s participation agreement.  In some cases, the UPIC contractors found that the provider had moved addresses and had not properly notified Medicare.  In other cases, a health care provider was alleged to have not been cooperative or refused to participate in a site visit.  As a participating provider in the Medicare program, your organization must fully meet each of its obligations under the agreement in order to remain in the program.

UPIC Referrals for Civil and Criminal Enforcement: UPICs are actively referring health care providers to law enforcement agencies such as the Office of Inspector General (OIG) and the  Department of Justice (DOJ) for possible civil and / or criminal enforcement) when a case appears to entail more than a mere overpayment.  However, just because a referral is made doesn’t mean that it will be prosecuted.  In many instances, OIG and / or DOJ will decline to open a case for a variety of reasons (such as lack of evidence, insufficient damages, etc.).

What Sources of Coding / Billing Data are used by UPICs? UPICs are required to use a variety of proactive and reactive techniques to identify and confront any potentially improper or fraudulent practices.  As set out in Chapter 2 of the Medicare Integrity Policy Manual (MIPM), UPICs utilize a wide variety of data sources. Primary sources relied on by UPICs include:

  • Claims Summary Information (CSI) reports.  CSI reports describe the various provider types and break down each provider’s utilization practices by units of service performed, charges billed, etc.
  • Part B Analytics System Report (PBASR). The PBASR compares utilization ratios by code, further broken down by MAC, and each provider’s specialty.
  • Short Term Alternatives for Therapy Services (STATS) reportsUPICs use STATS reports to analyze the outpatient therapy professional and provider claims data.
  • IDR Analysis Reports.  UPICs use IDR analysis reports and Focused Medical Review (FMR) to analyze shows Part B claims utilization and enrollment data.

III.  Final Thoughts:

Chiropractor-owned multidisciplinary practices and clinics currently appear to be under the proverbial microscope While there is little, if any, action that can reduce your likelihood of being targeted for an audit due to data-mining, there are a number of effective steps that you can reduce your risk of liability if an audit or investigation is initiated.  The design, implementation and adherence to provisions set out in an effective compliance plan can greatly improve your efforts to fully meet your statutory and regulatory requirements under the law.

Healthcare LawyerRobert W. Liles, JD, MBA, MS, CPC, serves as Managing Partner at the health law firm of Liles Parker, Attorneys and Counselors at Law.  Robert represents Chiropractors and other health care providers around the country in connection with UPIC audits, DOJ investigations, State Medical Board disciplinary, and other health law related issues.  Please give Robert a call for free consultation.  He can be reached at:  1 (800) 475-1906.

[1] Qlarant, Safeguard Services and CoventBridge are the current program integrity contractors that have been awarded contracts as Unified Program Integrity Contractors (UPICs) by the Centers for Medicare and Medicaid Services (CMS).

[2]  A copy of this article can be found at the following link.

[3] CMS, Medicare Program Integrity Manual, § 2, available at this link.

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