Providence Home Care: The Medical Director’s Pay and the Doctor in Federal Prison

In the Providence Home Care settlement, the former owner of Providence Home Health and Providence Hospice agreed to pay $1.05 million to resolve allegations of medical-director kickbacks and false Medicare claims identifying an incarcerated physician. One doctor was allegedly paid to send patients, while another appeared on claims for care the Inspector General alleged he never provided.

The Justice Department announced the settlement on December 10, 2020. The former owner, identified by the Inspector General as being from Sugar Land, Texas, had sold both businesses by then. The allegations concerned her conduct while she owned them, and the payment agreement was hers.

Medical-Director Pay and Medicare Referrals

The government alleged that the former owner used medical-director payments to induce Medicare referrals for home health care and hospice services. The payments allegedly exceeded fair market value and continued over two years.

The Health and Human Services Office of Inspector General’s account carries the allegation through to the public money. It alleged that the former owner submitted Medicare claims associated with those referrals.

For an insider who knows how physician compensation is set, the contract, the work and the referrals answer different questions. The agreement describes the duties being purchased. Payment records show what the physician received, and records of the work and referrals show how the relationship operated. We follow those connections because a medical-director title can make a payment sound clinical while the government’s allegation concerns the patients it was intended to bring in.

The 2020 Physician Leadership Journal discussion Proposed Stark Regulations: Small Step in the Right Direction examined proposed changes to physician compensation rules. Its distinction matters to a home-care insider: what the work is worth and whether the payment buys referral business are separate questions.

What Are Kickbacks in Health Care?

Kickbacks in health care include payments intended to induce referrals of patients whose care a federal program will pay for. In Providence’s case, the government alleged that excessive medical-director compensation served that purpose. The Justice Department said Medicare rules prohibited those payments for referrals.

The Robert Wood Johnson Foundation’s 2008 synthesis Physician Self-Referral and Physician-Owned Specialty Facilities identifies different financial incentives: recommending additional services and steering patients toward a facility with which the doctor has a financial relationship. The second explains why the destination of care matters. Providence’s alleged payment arrangement was aimed at getting Medicare patients referred to its home-health and hospice businesses.

We see the problem in that alleged bargain plainly: a patient referral becomes something the receiving business buys. The physician’s recommendation carries a financial incentive, and the resulting claim asks Medicare to fund the care. That is why the payment ledger and the referral records belong in the same conversation.

An Attending Physician Who Did Not Provide the Services

The former owner also allegedly submitted Medicare claims identifying a particular attending physician from April 1 through September 30, 2016, while that physician was incarcerated. His medical license was suspended on April 12, 2016. The Inspector General alleged that he, a different doctor from the medical director, did not provide services to the patients.

We see a stark gap between the bill and the bedside: the named physician was in federal prison. His name still appeared in the attending-physician entry, according to the government’s allegations. For someone who worked with those claims or patient records, the revealing connection is between the named physician, the service date and the care actually documented.

A similar gap between physician identity and the work appeared in Innovative Sleep Centers. In that settlement, the Justice Department alleged that the practice billed office visits by unqualified personnel as physician services and used its medical director’s identity for services furnished by lower-level providers. The comparison matters to a billing employee who can explain how a physician’s identity reached the claim and who actually saw the patient.

The Former Employees Behind the Case

Two former employees filed the Providence whistleblower case. The Inspector General’s office investigated with the U.S. Attorney’s Office for the Southern District of Texas. The settlement announcement said the employees would share a whistleblower award, and the former owner agreed to five years’ exclusion from Medicare, Medicaid and all other federal health care programs.

What Evidence Does a Whistleblower Need?

Useful evidence of physician billing fraud connects a government claim to what happened inside the business. For a directorship arrangement, we examine how the promised work, payments and referrals fit together. For a claim naming an absent physician, we connect the physician entry with the treatment record, schedules, signatures and the people who can explain the billing decision.

The 2017 Journal of AHIMA article Busting Bad Medicine: a Call to Action Addressing Healthcare, Fraud, Waste, and Abuse describes comparing patient records with treatment dates, procedures and signatures. It then makes the point that gives an insider’s account its value:

A ledger can show the payment, and a claim can show the physician’s identity. Someone inside the business may explain why the payment was made or how that identity was chosen. We work with that person to connect the documents to the decisions that put government money at stake.

How Much of a Settlement Does a Whistleblower Get?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. The Providence announcement described a collective award for the former employees who brought the case. A whistleblower reward is the share tied to the government’s recovery, and we help insiders build the case for recovering that money.

You Know How the Physician Reached the Bill

If you know what a medical director was paid to do, where the referrals came from or why an absent physician appeared on Medicare claims, speak to one of our Whistleblower Experts. We build the case with you and bring in healthcare fraud whistleblower lawyers who understand referral payments and physician billing. We stay beside you through the process, turning your knowledge of the payments and billing decisions into your strongest whistleblower case.