March 14, 2013

The Law & The Doctor Reinstein Fraud Case

by Levin & Perconti

When reading about the case against Dr. Michael J. Reinstein in Chicago, most community members understand in general terms what was going awry. All medical decisions, whether at the hospital, nursing home, clinic, or elsewhere need to be made with the best interests of the patient in mind. When other factors influence the decision (i.e. money), then the process has broken down.

But how does this sort of conduct implicate legal issues? In Dr. Reinstein’s case he is alleged to have over-prescribed a certain dangerous medications for his own personal gain--he was paid by the makers of the drug to push the product. But, it isn’t as if the Doctor intentionally harmed patients, and in certain cases the patients may actually have benefited from clozapine. Most understand how incredibly inappropriate and potentially harmful this conduct is, but the legal underpinning of the lawsuit related to these issues is less well known.

False Claims Act
As described in reports on the matter from the Chicago Tribune, the federal lawsuit that was filed against the doctor last November is mostly rooted in the federal law known as the False Claims Act. This law essentially seeks to prohibit the exact conduct that allegedly occurred in this case--the use of Medicare and Medicaid funds to pay for services that are motivated by financial interests (and not quality patient care).

When the attorney general in the case referred to the Medicaid fraud suit as the largest in the city’s history, that was mostly based on the total number of allegedly false claims that were made by Reinstein. For example, documents filed in the suit allege that over 140,000 such claims were submitted over the course of many years. This presumably refers to each instance where public coffers paid for one of his patients to receive a clozapine prescription. Additionally, the lawsuit claims that in at least 50,000 claims the doctor falsely stated that he personally monitored the condition of patients who received the medication. Those patients were scattered across a few dozen nursing homes in the area. According to the suit, that personal monitoring was non-existent. The doctor was apparently less concerned about ensuring his patients needed the drug and responded well to it, and more concerned with doling out the medication as much as possible so that he could remain useful to pharmaceutical companies who were providing him financial support

As part of the False Claims Act, the government is able to seek out “triple damages.” This is a critical deterrent tool. In most lawsuit, the purpose is to make the injured party “whole.” In this case, the injured party is the federal government--who spent money unnecessarily. Therefore, under normal circumstances, the government would be able to seek repayment of all the funds spent on fraudulent claims.

But if the maximum that the government can recover is what they paid out, then there is minimal deterrent effect. That is because the medical professionals have little to lose by trying to game the system. If they are not caught, then they keep the fraudulently obtained money. If they are caught, then they repay it. But that all changes with triple damages. In those cases, the party committing fraud can be held to repay three times the amount improperly received. In that way, any professional tempted to engage in this conduct might think twice, understanding the severe financial consequences upon discovery.

See Other Blog Posts:

Medicaid Waste: Billions Spent on Poor Care

Failing to Blow the Whistle