Ambulance firm, PRMC under federal Medicare fraud investigation

Federal authorities are investigating whether a private ambulance company, with Peninsula Regional Medical Center's cooperation, knowingly overbilled Medicare on thousands of nonemergency trips.

The probe stems from a whistleblower's lawsuit alleging that Hart to Heart Transportation Services falsified Medicare claims to make the case that ambulances were necessary to ferry newly-discharged hospital patients.

Dollar amounts of fraudulent claims filed by Hart to Heart were likely "in the millions," court documents say.

“It’s a big deal in the state of Maryland, and a huge deal in the region in which they operate because they’re one of the biggest (ambulance) operators," said David Scher, the Washington-based attorney who filed the federal suit on behalf of former Hart to Heart driver Bryan Arvey of Salisbury. “People in this region should be concerned."

The lawsuit claims it all began with a bedside ruse.

If patients could sit comfortably or walk — abilities that would likely disqualify Medicare reimbursement — Hart to Heart paramedics often would ask hospital staff to have them lie down in bed, the lawsuit contends. The paramedics would then strap the patient to a stretcher, potentially foisting unnecessary stress onto the patients, Scher said.

“If you’re a patient and you’re ambulatory and walking around and suddenly you’re being strapped down, that’s traumatizing," he said.

If patients refused to be taken out on a stretcher, the ambulance company ordered its employees to falsely report that the patients couldn't stand or could walk only with "maximum assistance," the lawsuit charges. Employees who refused to comply were threatened with suspension by managers; some were ultimately fired, according to the lawsuit.

Hart to Heart, based in the Baltimore suburb of Forest Hill, Maryland, denies all wrongdoing, according to the company's attorney, Jonathan Biran of Baltimore.

“Hart to Heart’s officers and team members work hard to ensure that the Company bills all insurance carriers and other payors appropriately," Biran said in a statement. "Hart to Heart is confident that a jury will determine that all claims were billed honestly and appropriately.”

The lawsuit accuses Peninsula Regional of aiding Hart to Heart in the scheme, arguing that the hospital's staff "acquiesced in and facilitated" the questionable transports.

"PRMC is aware of the matter and the allegations involving H2H," the hospital said in a statement. "While PRMC believes that it has at all times conducted itself appropriately, the allegations are being reviewed and investigated and PRMC is unable to comment further on the matter."

Fraud among nonemergency medical transport companies has bedeviled federal reformers for years, industry watchdogs say. They point to a U.S. Department of Health and Human Services inspector general investigation finding that about 1 out of 5 ambulance suppliers had submitted questionable bills.

Estimates of the amount of money lost to the billing schemes range from $350 million to $500 million a year.

“Crooked ambulance companies are riding the road to riches at taxpayer expense," said Jim Quiggle, spokesman for the Coalition Against Insurance Fraud, a Washington nonprofit that advocates for consumer protections.

For its part, Peninsula Regional had a strong financial incentive to go along with the scheme, Arvey's lawsuit alleges. Under its 2011 contract with Hart to Heart, the hospital agreed to absorb the cost for transports it requested for patients whose status didn't meet Medicare's reimbursement policy.

Medicare reimburses ambulance companies an average of $260 for the top level of nonemergency trips. If a patient doesn't meet Medicare's criteria for an ambulance transport, the federal agency won't cover the trip.

Arvey said in the suit that about half of the 50,000 ambulance pickups he witnessed during his time with the company were "not medically necessary." Those transports resulted in fraudulent Medicare claims "in the millions of dollars," he said.

Arvey could receive a financial incentive of his own if a federal judge rules that his claims are founded. Under federal statute, he would receive up to 30 percent of what the government collects if he wins the case. And the government can levy up to triple the amount of the actual damages.

Arvey's own background could become an issue if the case moves forward. Maryland online court records show arrests in 2002 and 2005 on charges of theft of items valued at less than $500. Neither case led to jail time.

Arvey also has been sued several times in recent years over alleged debts. In the most notable case, he was ordered to repay $12,000 in state unemployment benefits after his grounds for voluntarily leaving his previous job — going back to school — were overruled.

Scher said his client's motivation for filing his whistleblower lawsuit was to "report and stop fraud on taxpayers." He declined to make Arvey available for comment for this report.

More: Woman fakes death to commit fraud, prosecutors say

More: Police: Identity thief expands credit card fraud scheme to Salisbury

The lawsuit names as defendants Peninsula Regional Medical Center, Hart to Heart and EMS Billing Solutions, a claims-processing company whose only client is believed to be Hart to Heart. It also singles out three Hart to Heart executives: Richard Skidmore, vice president of operations and safety; John Skidmore, founder and co-owner; and Terry Skidmore, a co-owner and operator.

The lawsuit was filed in U.S. District Court in Baltimore in 2013 and unsealed — making its contents public — in 2015. A trial date is tentatively set for spring of this year.

But the most damaging allegations have only recently begun to emerge through the proceedings, providing a stark window into one of the most opaque parts of America's $3.2 trillion health care industry.

Investigators are still assessing the possible financial fallout. What is known is that Medicare paid Hart to Heart's Salisbury office nearly $14 million to transport newly discharged patients between 2010 and 2014, when the company closed the office, according to court documents.

In a memo dated April 21, 2017, Assistant U.S. Attorney Roann Nichols said the probe's focus is on the highest-paying types of reimbursement: transports from hospitals to nursing homes, assisted living facilities and patients' homes. The memo noted that investigators have interviewed witnesses as well as subpoenaed records from Hart to Heart and hospitals that contracted with the company.

Court documents filed thus far in the case show that the investigation's findings echo many of Arvey's claims.

One of the memo's most striking details: In interviews with "several" former Hart to Heart employees, "each described that he or she was told by company management" to transport patients by ambulance –– even if they didn't need one.

"Some were disciplined, or fired, or quit when they refused to make false entries into trip sheets," Nichols wrote. Their estimates for the share of trips made under false pretenses ranged from 25-50 percent.

The investigation also is examining payments made from Peninsula Regional to the ambulance company. Many, Nichols wrote, were entered months to a year beyond the dates of service after Medicare initially denied payment.

Until April, the Maryland U.S. Attorney's Office was headed by Rod Rosenstein. Rosenstein departed to become the deputy U.S. attorney general. His appointment of Robert Mueller as special counsel in the Russian election interference investigation made him a household name and White House pariah.

In the April 21 update to U.S. District Judge Richard D. Bennett, Rosenstein's staff said they had based their findings so far on interviews with several former Hart to Heart employees and an analysis of Medicare records as well as five months of billing reports from the ambulance company.

The federal prosecutor's office hasn't joined the lawsuit, explaining to the case's arbiter, U.S. District Judge Richard D. Bennett, that it needs more time to conduct its investigation. The office declined to comment for this report.

If the attorney's office joins the case, it would likely lead to settlement talks between the government and the defendants, legal experts say.

“The biggest factor is whether the government intervenes," said John Thomas, a Roanoke, Virginia, attorney who chairs the Federal Bar Association's whistleblower committee. "These cases very rarely go to trial. Most of the times they settle. And given that track record, I would expect that to happen in this case.”

More: Hogan, Democrat introduce bills creating school watchdogs amid corruption allegations

More: Feds raid Salisbury medical office over fraud allegations

The companies operate in a grayer regulatory world than their counterparts that rush to traffic accidents and stabilize heart attack victims, Quiggle said.

When patients are ready to be discharged from a hospital to a long-term rehabilitation center, for example, they may be unable to sit up, or require medical supervision during the ride. That need has given rise to an industry that has doubled in size since 2003 to $5.8 billion in Medicare payments.

That industry, however, is particularly vulnerable to fraud, Quiggle said.

“Many ambulance rides can be justified with subjective medical judgment," he said. "It’s one’s person’s medical judgment against another, and who is right?”

The most common problems include patients being transported between destinations not covered by Medicare, billing for exorbitant amounts of mileage and charging for unnecessary levels of service, the Health and Human Services inspector general found.

Federal investigations have led to several large settlements with companies across the country, including $1.3 million from a Florida supplier in 2015, $3.6 million from a Philadelphia supplier in 2014 and $1.2 million from a Tennessee supplier, also in 2014.

Ambulance-related fraud was so rampant in Houston and Philadelphia that the Centers for Medicare and Medicaid Services suspended bringing on new ambulance suppliers in those two markets.

Much of the industry's current legal woes can be traced to its founding, said Jay Fitch, who heads the largest emergency medical services consulting firm in the United States.

In the early days, the same ambulances that brought patients to the hospital would often take them home as well, he said. But that began to strain their resources as the volume of emergency calls increased over time. As traditional ambulances dropped nonemergency transports, mom-and-pop companies stepped in to fill the void.

Regulations were slow to catch up to the new business model, and when they did, the resulting patchwork of state, county and local laws proved to be woefully inadequate at halting fraud, Fitch said.

“Ambulance services are generally regulated and overseen at the local level. So there are lots of different ways that things get interpreted and looked at," he said.

To this day, many of the companies remain small and often lack the internal controls that larger health care companies put in place decades ago, Fitch added.

'When it’s not medically necessary'

Scher, the attorney leading the case against Hart to Heart and Peninsula Regional, said the case almost certainly wouldn't have come to light if his client hadn't spoken up about what he saw.

"Unless you’re going to have cameras on a patient, it’s hard to prove unless you have enough people saying this was company protocol," Scher said.

Arvey, 34, drove for Hart to Heart's Salisbury office from summer 2010 until February 2013, according to the lawsuit. The company employs more than 350 people and operates a fleet of 80 vehicles, including ambulances, wheelchair vans and sedans.

It is licensed to do business in Maryland, Delaware, Pennsylvania and New Jersey.

Orders to falsify patient narratives or strap them unnecessarily to stretchers, the lawsuit charges, usually came from Richard Skidmore, head of operations and safety. Arvey said he would ask more-senior emergency medical technicians about the practices but was told he should follow Skidmore's instructions.

Arvey recalled that Skidmore told him and other employees that failing to "correct" their case reports would lead to their suspension or termination. When he assisted with office duties during a period around September 2012, Arvey said he learned that Skidmore had instructed managers to make the changes themselves. That required them to enter another employee's Social Security number to access the reports.

Arvey alleges that Hart to Heart streamlined paperwork to aid the scheme. What began as 50 different possible billing codes available to drivers was whittled down to two; both steered drivers toward claims that an ambulance transport was a medical necessity.

If that's true, said Fitch, the ambulance consultant, that practice would fall outside the industry's norms. If he had discovered such protocols with one of his clients, he said, he would strongly urge them to "self-disclose" that information to Medicare and stop limiting the number of codes immediately.

"It’s against the law to bill when it’s not medically necessary," Fitch said.

The outcome of the lawsuit will likely depend on whether the Justice Department intervenes. Its decision to stay on the sidelines while it completes that investigation probably has nothing to do with the merits of the case itself, legal experts say.

Often, such cases, filed under the so-called False Claims Act, take three to seven years to wend their way through the court system, said Byung J. Pak, an attorney and a former prosecutor with the U.S. Attorney's Office in the Northern District of Georgia.

The cases tend to be highly complex, and the staffing inside federal attorney offices is often stretched thin, Pak said.

Investigators are trying to determine whether Hart to Heart's possible fraud spread to other hospitals as well.

"The government is in the process of reviewing documents, including emails, obtained from other hospitals that contracted with Hart to Heart, and analyzing billing and payment data based on those documents," Nichols said near the close of the memo.

Hart to Heart's attorney, Biran, chided the U.S. attorney's office in a follow-up memo for detailing the findings of the investigation in a publicly filed letter. That information could have been shared in an email directly to the judge or over the phone, he said.

Biran called on the court to seal the documents, saying the information contained in them "could have a substantially detrimental effect" on Hart to Heart's business.

His letter is dated May 15, 2017. As of Feb. 21, the documents were still visible on PACER, the government's online database for federal lawsuits.

After years of questionable billing practices in the ambulance industry, Fitch said he isn't surprised that Hart to Heart and other companies find themselves in the crosshairs of federal prosecutors.

“I think the federal government is trying to raise the profile and awareness this isn’t going to be tolerated," the consultant said. “They’re trying to make sure these get the high profile they need to say to people 'Don’t do this.'”

410-845-4630

On Twitter @Jeremy_Cox

More: Cruisin' car event officially coming back to Ocean City

More: Harcum family may lose Colonial era-farm amid dairy industry decline