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| Dear Friend,
Doctors behind bars.
Forest Park was a Texas chain of beautifully constructed hospitals. Operative word: was.
Beneath the veneer of great architecture and beautiful interior design was, so federal prosecutors alleged, a decrepit scheme involving questionable marketing agreements and multiple types of fake arrangements from “consulting contracts” to “leases” and even fake companies.
The alleged aim? Referrals of well-insured patients to the out-of-network hospitals.
Last week, a slew of defendants, including physicians, were sentenced to terms in federal prison.
Some Background
In April 2019, the jury in the second round of Forest Park bribery and kickback trials in federal court in Dallas found seven of nine defendants guilty.
- Spine surgeon Shawn Henry, D.O.
- Spine surgeon Michael Rimlawi, D.O.
- Pain management physician Mike Shah, M.D.
- Spine surgeon Douglas Won, M.D.
- Nurse and workers’ compensation insurance consultant, Iris Forrest
- Forest Park’s co-administrator Mac Burt
- The owner of companies through which Forest Park channeled payments to physicians, Jackson Jacob
Others had been found guilty at earlier trials or had pleaded guilty.
At issue were multiple charges, from violation of the federal Anti-Kickback Statute to money laundering. The government contended that Forest Park took in $200 million and paid out $40 million in kickbacks and bribes before finally shutting down all business operations. Central to the fact pattern concerning the convicted physicians was the “co-marketing agreement” concept: The physicians were given “marketing money” to boost their practices and, ultimately, the hospitals’ business.
The defendants argued that the so-called “marketing money” was not tied to referrals, an argument that the prosecution dismissed. At least one of the participants in the scheme admitted that marketing money was doled out as a percentage of referred cases.
The Sentencings
- Shawn Henry, D.O. – 7 ½ years
- Michael Rimlawi, D.O. – 7 ½ years
- Mike Shah, M.D. – 48 months
- Douglas Won, M.D. – 5 years
- Iris Forrest – 3 years
- Mac Burt – 12 ½ years
- Jackson Jacob – 8 years
In addition to those seven defendants, the following individuals were also sentenced last week:
Hospital manager Alan Andrew Beauchamp, who pleaded guilty, was sentenced to 5 years, 3 months.
Wade Neal Barker, M.D., a Forest Park co-founder, who pleaded guilty, was sentenced to 5 years.
Chiropractor Frank Gonzalez who referred patients to Forest Park for bribes and who pleaded guilty, was sentenced to 21 months.
Israel Ortiz, who pleaded guilty and whose company filled out pre-authorizations for worker’s comp patients received a 1 year sentence..
But wait, there’s more:
The other Forest Park co-founder, Dr. Richard Toussaint Jr., who pleaded guilty, was previously sentenced to five years in prison to run concurrently with another sentence he was previously serving.
Andrew Jonathan Hillman, a health care company owner, was sentenced in December 2019 to five years in prison after pleading guilty.
Semyon Narosov, Hillman’s business associate, was sentenced in July 2020 to 4 years 3 months in prison after pleading guilty.
Carli Adel Hempel was sentenced in October 2020 to three years’ probation. She pleaded guilty.
And, Kelly Wade Loter and Andrea Kay Smith, both of whom pleaded guilty, were given probation in January 2020.
The Moral
The easiest (and most gratuitous) takeaway is that kickbacks are illegal. But, you already knew that.
What is far more important to note is the need for caution, extreme caution, whenever entering into any sort of financial relationship with someone or some entity with whom you share a referral relationship, no matter which way the referrals flow.
For example, some of the allegations in the Forest Park case centered around the payment of “marketing money” from the facility to physicians. Some naïvely believe that marketing money from a hospital to physicians is not something that should involve significant anti-kickback scrutiny. Wrong.
Additionally, Forest Park shows that even convoluted payments through “money drop” entities, even ones that look like a game of Chutes and Ladders, can be un-woven. And, as a double take away for you, they can be un-woven by other participants in a scheme such as the former Forest Park Chief Operating Officer and a physician/investor/founder who both previously pleaded out early and cooperated with the authorities in convicting their fellow schemers.
One can assume that all or nearly all of the now convicted men and women had counsel advise them on the propriety of their arrangements. In fact, the Dallas Morning News reported that the sentenced physicians had the marketing money deal “approved” by their so-called “health care lawyers”.
When someone tells you the deal is okay because their attorney vetted it, do not be so sure. Get your own counsel.
And, make sure that the person advising you not only has knowledge, but also a good dose of common sense, which, apparently, is not that common. |
| | | 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 and more polished transcript:
You've probably heard the bromide, “No risk, no return.”
What if I could teach you about a way to reduce your risk while getting the same return?
You've probably seen these things in agreements called representations and warranties. What are they all about?
Consider the following to be "Representations and Warranties 101". A representation in a contract is a statement that something is in a certain condition or exists or does not exist.
Think about this in the context of buying a used car.
You're looking for a used Subaru Outback and you ask the seller, “Has this thing ever been in an accident?” Forget about the existence of Carfax – you simply ask if it has been in an accident and the seller says "no". Well, that's about as enforceable as an agreement to buy the Brooklyn Bridge -- it's worthless.
But what if you put the care purchase agreement in writing? What if you had a representation that said that Outback vin #1234 has never been in an accident?
The companion piece to a representation is the warranty. If it turns out that what was represented isn't true, then, in our Outback example, the seller is liable.
For example, sticking with our used Outback, if a month later you took the car to a body shop to repaint the hood and the guy writing up the order says that they saw the same Outback six months ago when they replaced the entire right side of it – then you would have recourse against the seller.
The same concept is used in many (but can be used in many more) agreements to which medical groups and physicians are parties. For example, representations as to the status of the facts underlying a deal, representations made concerning the volume of cases at a facility, or representations concerning the existence of certain licenses and permits – you get the idea.
Representations and warranties are not boilerplate "crap", they are not something you should be skimming through. They are important risk-sharing, risk-allocation provisions. Treat them as such when you are making a representation and giving a warranty. Treat them as such when you are negotiating for the other side to make representations to you.
You might think of it this way: Consider how their traditional use might be expanded to shift more of the risk in a deal to the other side.
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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 - Cooking Time = Negotiating Time - Rebroadcast - Medical Group Minute
Watch the video here, or just keep reading below for a slightly polished transcript:
As my wife and I were in the kitchen, she quipped, peering into the oven, that she forgot to set the timer for the final step of the recipe.
I asked what she should have set the timer for, and she said 8 minutes, but that that was just cooking time, not actual time.
Hmm. Was time different inside the oven? Was a minute not a minute?
Okay, I am not an idiot. I know that "cooking time" just means "estimated time." Or does it? Think about it for a moment. Is time always the same?
I am not trying to go all Einstein on you. [Einstein is said to have said, but probably did not himself say, in explaining relativity, something to the effect of, "When you sit with a nice girl for two hours you think it is only a minute, but when you sit on a hot stove for a minute you think it is two hours. That is relativity.”]
Or, maybe I am, because "cooking time" as a different sort of time, a distorted time, a malleable time, is a perfect concept for use in negotiation.
Each negotiation has its own timing, not one set by a standard recipe or by a clock on the wall or on the calendar, but one that can be, and should be, set by you.
The object is not to get the deal done quickly, but to get the deal done - meaning on terms acceptable to you. Accomplishing that rarely means quickly and it always means deliberately.
Sometimes it means changing the clock to slow things down or to speed it up. Always it means deciding when to bring up issues, adding ingredients to the deal, if you will.
Other times it means imposing deadlines, real or imagined. Almost always it means ignoring deadlines.
Time in negotiation is not real time.
Instead, it is a tool in the kitchen drawer of negotiation. A very useful tool.
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| | | Listen to the podcast here, or just keep reading for the transcript.
It is a crime, a violation of antitrust law, to conspire to allocate a market, thus driving up price. It is particularly egregious when the conspiracy involves the market for medical care for cancer treatment.
Earlier this year, the U.S. Department of Justice (“DOJ”) announced the coordinated filing of a one-count felony charge against Florida Cancer Specialists & Research Institute LLC (“FCS”), an oncology group headquartered in Fort Myers, Florida, and a deferred prosecution agreement with FCS whereby it agreed to pay a $100 million criminal penalty, the statutory maximum.
Underlying the charge were allegations that FCS participated in a criminal antitrust conspiracy with a competing oncology group whereby the groups agreed not to compete to provide chemotherapy and radiation treatments to cancer patients. The allegations were that the conspiracy allocated chemotherapy treatments to FCS, and radiation treatments to a competing oncology group, such that FCS was illegally allowed to operate with minimal competition in Southwest Florida; thereby limiting valuable integrated care options and choices for cancer patients.
The deferred prosecution agreement includes FCS’s agreement not to enforce any non-compete provisions with its current or former oncologists or other employees who open or join an oncology practice in Southwest Florida. And, it requires FCS to cooperate fully with the government’s ongoing investigation.
As a likely result of that cooperation, the DOJ announced on September 24, 2020, the return of a grand jury indictment against FCS’s founder and former president, William Harwin, M.D., for his alleged participation in the antitrust conspiracy. It must be noted that an indictment is a set of allegations, not a conviction.
If proven guilty, Dr. Harwin could be sentenced to up to 10 years in prison and a $1 million fine.
Entities might enter into an illegal arrangement and eventually suffer both the criminal and civil prosecution consequences. But that's not the end of the story: Government investigations, prosecutions, and convictions can, and do, reach through to the individuals involved.
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| | | 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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