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| Dear Friend,
Lab made kickbacks.
Lab made meat. Lab made leather. Both appeared in the news this week.
But so, too, did the indictment of 10 individuals, including two physicians and one nurse practitioner, for an alleged lab made $300 million kickback scheme.
According to an indictment announced by the U.S. Attorney’s Office for the Northern District of Texas on February 10, 2022, the conspiracy involved clinical lab kickbacks disguised as legitimate business transactions.
The scheme claimed by the government involves several lab companies including Unified Laboratory Services, Spectrum Diagnostic Laboratory, and Reliable Labs LLC, which allegedly paid kickbacks to induce internal medicine specialist Eduardo Canova, M.D., family medicine practitioner Jose Maldonado, M.D., and nurse practitioner Keith Wichinski to order medically unnecessary lab tests, which were then billed to Medicare and other federal healthcare programs.
The government alleges that the remuneration was disguised to appear as if it were legitimate. This includes assertions that the defendants were paid, via money funneled through marketers, for claimed medical advisor services that were never performed, that the labs paid portions of the doctor’s staff’s salaries, and that the labs paid a portion of their office leases, contingent on the number of lab tests they referred.
Of particular interest to physicians who would never consider becoming involved in any of the alleged activity, but might have been interested, even if momentarily, in physician-owned lab models, the government also alleges that Jeffrey Madison, the founder of Unified Laboratory Services and Spectrum Diagnostic Laboratory, convinced the co-founders of Reliable Labs LLC, Biby Kurian and Abraham Phillips, to convert Reliable into a physician-owned lab. The indictment claims that Reliable offered physicians ownership opportunities only if those physicians referred an adequate number of lab tests.
It’s claimed that the scheme generated more than $300 million in fraudulent billing and that Dr. Canova received more than $300,000 in kickbacks for ordering more than $12 million worth of lab tests, and that Dr. Maldonado received more than $400,000 in kickbacks for ordering more than $4 million worth of lab tests.
The charges levied against the various defendants include conspiracy to commit healthcare fraud, conspiracy to pay and receive healthcare kickbacks, offering or paying illegal kickbacks, and soliciting or receiving illegal kickbacks.
If convicted of the alleged conduct, the defendants face up to 55 years or more in federal prison.
For the curious (and to satisfy schadenfreude), the indicted defendants are:
• Jeffrey Paul Madison, 56, founder of Unified Laboratory Services and Spectrum Diagnostic Laboratory
• Mark Christopher Boggess, 49, chief operating officer for Spectrum and Unified
• Biby Ancy Kurian, 49, co-founder of Reliable Labs, LLC
• Abraham Phillips, 50, co-founder of Reliable Labs, LLC
• Dr. Jose Roel Maldonado, 48, family medicine doctor based in Laredo
• Dr. Eduardo Carlos Canova, 44, internal medicine specialist based in Laredo
• Keith Allen Wichinski, 50, board-certified nurse practitioner based in San Antonio
• David Michael Lizcano, 56, owner of DCLH, a marketing firm engaged by Unified, Spectrum, and Reliable
• Laura Ortiz, 58, sister of David Lizcano and an employee at his marketing firm
• Juan David Rojas, 34, owner of Rojas & Associates, another marketing firm engaged by Unified, Spectrum, and Reliable
Remember, an indictment is an allegation of criminal conduct; it is not a determination of illegality nor is an indictment itself evidence. Drs. Canova and Maldonado, and each of the other defendants, are presumed innocent until proven guilty in a court of law.
The (Should be) Evident Takeaways
The federal Anti-Kickback Statute makes it illegal to offer, solicit, pay, or accept remuneration for the referral of services or products to federal healthcare program patients.
Penalties for violation of the AKS include jail time, criminal fines, civil monetary penalties and debarment from participation in federally funded health care programs.
What passes as common knowledge in this area does not come close to comprehending the complexity of AKS compliance. Certainly, any payment in cash or in kind, such as for rent or staff salaries, in connection with a referral arrangement should easily be seen by you for what it is – a kickback.
More sophisticated schemes, often centering around, in the lab context, physician-owned labs and schemes that claim to segregate referrals of federal healthcare program patients from all other patients, are, for many, harder to spot, but they should all be viewed by you as painted with fluorescent bullseye targets.
In my experience, the other party to one of these deals often claims, rightly or wrongly, that the deal has been “approved by our healthcare counsel.” Maybe they’re lying. Maybe they’re telling the truth and their lawyers are clueless; the lawyers certainly won’t go to jail for their client. Be very careful when entering into any arrangement with a referral source or a recipient of your referrals. Get experienced healthcare counsel involved at the earliest point in time – and, that means, before you do it.
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| | | Business Life in the Time of Coronavirus Mini-Series
The coronavirus crisis caused a short term economic crisis for many medical groups. Our mini-series shows you the way out. Plus, many of the concepts discussed are applicable during both good times and bad.
[If you haven't already seen them, follow this link to watch our entire series.] |
| | Watch Tuesday's video here, or just keep reading below for a revised, more polished version:
Let’s talk about fear of missing out. Or maybe it’s the lack of optionality.
I’m sure you’re familiar with the expression FOMO – fear of missing out.
Am I going to miss this opportunity? What if it presents itself?
What if I lock myself into doing X? Will I be able to take advantage of Y?
This not only impacts those people thinking about what party invitation they might get for New Year’s, but medical group leaders of all stripes.
But there’s another thinking problem, or should I say issue here, and that is, whether, when an option comes up, you have the ability to take it. This might also appear as a fear of making a decision, say to jettison a contract or an entire facility, because you don't have any other options.
It becomes like being stuck on a freeway when you really have to use the restroom . . . there are no exits . . . there is no option.
I’m coming up here to this intersection, whether there are three fast food spots, three gas stations, or only one. What options have you created for yourself that not only allow you to hedge your risk across multiple contracts (for example), but which allow you not to be taken hostage by your contracting opposite when they know they have you over the barrel because they know that they are your only option?
You’ve created that situation yourself.
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| | How to Deploy the Secret Sauce of Opportunistic Strategy
Webinar On Demand
They say that COVID-19 has changed the world, creating the "new normal." Many of your colleagues and many hospital administrators are running scared.
Others, leaders like you, know that crisis means opportunity.
Let me provide you with the strategic tools and insights that you need in order to seize opportunities, whether they’re in the context of your current business relationships, the expansion of your business activities, or the creation of new ventures.
You will learn:
•Defense as a defective default: It’s necessary, but not sufficient.
•Exploiting weakness: Drop the guilt and identify opportunity.
•Flat line negotiation is fatal: Understand its myths and limitations.
•Negotiation reality: Learn to identify and deploy on multiple planes to affect the outcome.
•Maneuver: Harness the power of maneuver, both in overall strategy and in specific negotiation strategy.
Others see a crisis and freeze in fear. Learn how to see the opportunities and obtain the tools to increase your odds of obtaining them.
The price to attend is $479. The cost of not attending is astronomical. |
| | | Wednesday - From Pigs to Model T's to Medical Care - Medical Group Minute
Watch the video here, or just keep reading below for a slightly polished transcript:
It's said that Henry Ford adopted the modern production line, with each worker focusing on a part instead of assembling a whole, from his observations of the way that Chicago slaughterhouses "dressed" pigs.
On October 1, 1908, the first Model T rolled off the production line. Available, famously, in any color you wanted as long as that color was black.
Ford focused on keeping things simple, building one model that (had to) suit all, using interchangeable parts that relatively unskilled workers could assemble.
How different is this from the model of healthcare envisioned by many today? "Best practices" replacing innovation. One model replacing high touch care. Delivery via relatively unskilled workers (paraprofessionals).
In the end, the public wanted more - and the Model T rode off into history.
History is sure to repeat itself. |
| | | Listen to the podcast here, or just keep reading for the transcript.
Driving through the mountain town built around a lake, I couldn’t help but notice the David Isaac empire. (David Isaac isn’t his real name, I’ve changed it for this post.)
There was David Isaac Boat Sales. A mile or so away, there was the David Isaac Marina. And, there was David Isaac Toyota. A quick Google search reveals that he has similar car and boat businesses in other towns, too.
Mr. Isaac built a web of interlocking “motorized” businesses, each of which could stand alone, and each of which, some more than others, serves to drive customers to other elements of his ventures.
Over the past decade, much of the web building in healthcare has involved hospitals creating “systems.” Hospitals purchased physician practices, employed and otherwise aligned physicians, and pushed into outpatient care.
But now, with an increasing number of procedures capable of being performed in free-standing facilities, from urgent care to emergency medicine, to free-standing surgical facilities ranging from interventional radiology ASCs to orthopedic surgery ASCs, to, well, almost, you-name-it ASCs, physicians have an increasing opportunity to create their own interlocking webs around the central themes of healthcare and wellness.
It’s true that there’s significantly more regulation of healthcare investments by physicians than there are regulations throttling David Isaac’s motorized empire. But Stark, the federal Anti-Kickback Statute, their state law counterparts and so on are just details. Important details, yes, but not roadblocks to creating you own business structure larger than a single physician practice.
Mr. Isaac could have stopped with his single boat sales lot on Main Street. He didn’t. |
| | | Calibrate Your Compass
Read our exclusive RedPaper to guide you through this evolving situation.
The coronavirus crisis caused a short-term economic crisis for many medical groups. Our RedPaper shows you the way out. Plus, many of the concepts discussed are applicable during both good times and bad.
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| | Help Us Help You With Helpful Content
What tailored content would you most like to see during this
time? How can we focus on solutions to your most pressing strategic concerns?
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| | | | We all hear, and most of us say, that the pace of change in healthcare is quickening. That means that the pace of required decision-making is increasing, too. Unless, that is, you want to take the “default” route. That’s the one is which you let someone else make the decisions that impact you; you’re just along for the ride. Of course, playing a bit part in scripting your own future isn’t the smart route to stardom. But despite your own best intentions, perhaps it’s your medical group’s governance structure that’s holding you back.
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| In fact, it’s very likely that the problem is systemic. The Medical Group Governance Matrix introduces a simple four-quadrant diagnostic tool to help you find out. It then shows you how to use that tool to build your better, more profitable future. Get your free copy Free.
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| | | | Whenever you're ready, here are 4 ways I can help you and your business:
1. Download a copy of The Success Prescription. My book, The Success Prescription provides you with a framework for thinking about your success. Download a copy of The Success Prescription here.
2. Be a guest on “Wisdom. Applied. Podcast.” Although most of my podcasts involve me addressing an important point for your success, I’m always looking for guests who’d like to be interviewed about their personal and professional achievements and the lessons learned. Email me if you’re interested in participating.
3. Book me to speak to your group or organization. I’ve spoken at dozens of medical group, healthcare organization, university-sponsored, and private events on many topics such as The Impending Death of Hospitals, the strategic use of OIG Advisory Opinions, medical group governance, and succeeding at negotiations. For more information about a custom presentation for you, drop us a line.
4. If You’re Not Yet a Client, Engage Me to Represent You. If you’re interested in increasing your profit and managing your risk of loss, email me to connect directly. |
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