Complaint US Ex Rel - Barron and Scheel V Deloitte and Touche Consulting, False Claims Act

First Amended Complaint U.S. ex.rel.Barron and Scheel vs.
Deloitte & Touche Consulting Group, et al
SA-99-CV-1093FB Page 1 of 53
UNITED STATES DISTRICT COURT WESTERN DISTRICT OF TEXAS UNITED STATES OF AMERICA, ex rel TONI R. BARRON AND VICKY J. SCHEEL, Plaintiffs vs. * DELOITTE & TOUCHE, LLP, DELOITTE TOUCHE CONSULTING GROUP, LLC., DELOITTE & TOUCHE CONSULTING GROUP HOLDING, LLC, MEDICAID SOLUTIONS OF TEXAS, and NATIONAL HERITAGE INSURANCE COMPANY, Defendants * * * * CIVIL ACTION NO. SA-99-CV-1093FB * * *
FIRST AMENDED COMPLAINT FOR DAMAGES AND OTHER RELIEF UNDER THE FALSE CLAIMS ACT This is an action to recover damages, civil penalties and equitable relief on behalf of Plaintiff, the UNITED STATES OF AMERICA (the U.S. or the GOVERNMENT), arising from DEFENDANTS knowing submission of false and fraudulent charges to the U.S., directly or indirectly, for payment under the Medicaid program in violation of the False Claims Act, 31 U.S.C. 3729 et. seq. as amended (the ACT). It is also on behalf of TONI R. BARRON and VICKY J. SCHEEL (the RELATORS) through the undersigned counsel who, acting on behalf of and in the name of the U.S., bring this civil action under the qui tam provisions of the False Claims Act, and allege as follows:
First Amended Complaint U.S. ex.rel.Barron and Scheel vs. Deloitte & Touche Consulting Group, et al
JURISDICTION AND VENUE 1. This Court has jurisdiction over the subject matter of this Complaint pursuant to the False Claims Act, 31 U.S.C 3729 et seq., 28 U.S.C. 1345 and 31 U.S.C. 3732(a). The Court has personal jurisdiction over the DEFENDANTS because the DEFENDANTS reside and/or transact business in San Antonio, Bexar County, Texas.
2.
Venue in this District is proper pursuant to 28 U.S.C. 1345 and 31 U.S.C. 3732(a), which provide that any action under 3730 may be brought in any judicial district in which the DEFENDANT or, in the case of multiple DEFENDANTS, any one DEFENDANT can be found, resides, transacts business, or in which any act proscribed by 3729 occurred. The acts and violations complained of herein occurred in San Antonio, Bexar County, Texas where DEFENDANTS reside and transact business.
3.
Under the False Claims Act, this complaint is to be filed in camera and remain under seal for a period of at least sixty (60) days and shall not be served on the DEFENDANTS until the Court so orders. The GOVERNMENT may elect to intervene and proceed with the action within sixty (60) days after it receives both the complaint and the material evidence and information.
4.
This action is not based upon any public disclosure of information within the meaning of 31 U.S.C. 3730 (e)(4)(A). The RELATORS have direct and
independent knowledge, within the meaning of 31 U.S.C. 3730(e)(4)(B), derived through their employment and/or contracts with the Northeast Independent School District (NEISD), the Judson Independent School District (JISD) and the Southwest Independent School District (SWISD) and their own investigations, of the information on which the allegations set forth in this Complaint are based. RELATORS have voluntarily provided this information to the GOVERNMENT prior to filing this Complaint. To the extent any of these allegations may have been publicly disclosed, within the meaning of 31 U.S.C. 3730(e)(4)(A), the RELATORS were the source of the disclosures. 5. RELATORS provided to the Attorney General of the United States and to the United States Attorney for the Western District of Texas, San Antonio Division. Pursuant to the False Claims Act, 31 U.S.C. Section 3730 (b)(2), shortly after the filing of this complaint, a statement of all material evidence and information related to the complaint was served on the United States. Defendants DELOITTE, NHIC, and MCST. 6. This action is brought by RELATORS on behalf of the United States of America to recover all damages, penalties and other remedies established by and pursuant to 31 U.S.C. 3729-3733 and RELATORS claim entitlement to a portion of any recovery obtained by the United States as a Qui Tam Plaintiff authorized by 31 U.S.C. 3730. This Disclosure Statement supports the existence of overcharges and false claims by
PARTIES TO THE ACTION 7. Relator TONI R. BARRON (Ms. Barron), a citizen of the United States and a resident of 646 Golfcrest Drive, San Antonio, Texas 78239, is suing on behalf of and in the name of the UNITED STATES OF AMERICA. Ms. Barron is a speech language pathologist. At the time of filing ,Ms. Barron is an independent contractor with the public schools of San Antonio, Texas. During all relevant times of the acts described in this lawsuit, Ms. Barron was employed and/or under contract with Judson Independent School District (JISD) and with the Southwest Independent School District (SWISD) to provide speech therapy services to those students qualified to receive her services. 8. Relator VICKY J. SCHEEL (Ms. Scheel), a citizen of the United States and a resident of 16302 Tres Ritos, San Antonio, Texas 78247, is suing on behalf of and in the name of the UNITED STATES OF AMERICA. Ms. Scheel is a physical therapist. At the time of filing and during all relevant times of the acts described in this lawsuit, Ms. Scheel was employed by the Judson Independent School District (JISD)and the Northeast Independent School District (NEISD) to provide physical therapy services to those students qualified to receive her services. 9. The CENTERS FOR MEDICARE AND MEDICAID SERVICES ("CMS"), formerly known as the HEALTH CARE FINANCING ADMINISTRATION (HCFA), is an agency of Plaintiff U.S. CMS operates within the United States Department of Health and Human Services (HHS), and its central office is responsible for setting federal Medicaid policy and coordinating the administration of the 50+ state and territorial Medicaid programs. CMS has 10 regional offices whose
responsibilities include the oversight of the state Medicaid programs within their jurisdiction. CMS is the agency charged with ensuring that that each states As such, CMS has Medicaid program meets federal Medicaid requirements.
oversight over the School Health and Related Services Program (SHARS) and the Medicaid Administrative Claiming (MAC) in the public schools. 10. Defendant DELOITTE & TOUCHE, LLP (DT- LLP) , is a limited liability partnership organized under the laws of Delaware. Its mailing address is 10 Westport , PO Box 820, Wilton, Connecticut 06897-0820. It has been authorized to do business in the state of Texas and its agent for service is Corporation Service Company, 800 Brazos Street, Austin, Texas. DT- LLP is the manager member of DELOITTE & TOUCHE CONSULTING GROUP HOLDING, LLC.
11.
Defendant DELOITTE & TOUCHE CONSULTING GROUP, LLC, (DTCG) is a limited liability company organized under the laws of Delaware. It is authorized to do business in the state of Texas and its agent for service is Corporation Service Company, 800 Brazos Street, Austin, Texas. DTCG is in the business of providing consulting services to its clients. Its manager member is DELOITTE & TOUCHE CONSULTING GROUP HOLDING, LLC.
12.
Defendant DELOITTE & TOUCHE CONSULTING GROUP HOLDING, LLC, (DTCG Holding) is a limited liability company organized under the laws of Delaware. It is authorized to do business in the state of Texas and its agent for service is Corporation Service Company, 800 Brazos Street, Austin, Texas. Its
manager member is DT-LLP.
13.
DT-LLP and its affliates, including, but not limited to,
DTCG and DTCG
HOLDING (herein collectively referred to as DELOITTE) provide accounting, tax, consulting, and management information services to clients in the United States and around the world. DELOITTE, a nationally recognized expert in the area of healthcare consulting, is an industry leader familiar with the laws and regulations that govern billing and reimbursement from federal health insurance programs. 14. The NATIONAL HERITAGE INSURANCE COMPANY (NHIC") is a wholly owned subsidiary of Electronic Data Systems, Inc., a public for-profit corporation. NHIC is the claims administrator for Texas Medicaid and the fiscal agent that pays valid Medicaid claims. Additionally, it is NHICs responsibility to ensure that all claims submitted for payment are adequately documented, medically necessary, and that the services provided and the level of reimbursement is in keeping with Medicaid rules and regulations. If the claims fail to meet the requirements set forth in the rules and regulations, it is NHIC's responsibility to deny payment. In the year 2000, NHIC earned $99 Million in administrative fees for the processing and administration of $3.5 Billion in Medicaid claims, or approximately 2.8%. This amount was exclusive of compensation for software development and other duties and incentives under the Texas Medicaid contract. Among its numerous duties, NHIC enrolls new providers, conducts state-wide seminars and training sessions on the Medicaid billing rules, monitors provider billing patterns, operates and maintains the seeks Medicaid Management Information System (MMIS) of the state,
reimbursement from liable third parties, and monitors for fraud and abuse through desk and field audits and other activities.
15.
MEDICAID CLAIMS SOLUTIONS OF TEXAS (MCST) is a for-profit entity organized under the laws of the state of Texas. Gordon Harmon is a principal of the company, and actively participates in the day to day operations of the business. MCST provided consulting services to various school districts in the state of Texas. These consulting services included SHARS training and administration and third party billing of Medicaid claims for the districts. Its principal place of business is 747 Highway 287 North, Mansfield, Texas 76063 and its agent for service is Gordon Harmon who can be served at the same address.
RELATORS ARE ORIGINAL SOURCE AND HAVE INDEPENDENT KNOWLEDGE 16. The RELATORS have direct and independent knowledge, within the meaning of 31 U.S.C. 3730(e)(4)(B), To the extent any of these allegations may have been publicly disclosed, within the meaning of 31 U.S.C. 3730(e)(4)(A), the RELATORS were the source of the disclosures. 17. In 1992-3, Relators were introduced to the SHARS program. After careful study of the program, Relators originally became concerned with possible deleterious effects to their professional licensure. Later, they identified serious problems with the billing of federal monies for school-based services. 18. On January 25, 1993, Relators contacted Diana Pfaff, representative of NHIC to ask questions and voice their concerns with the overbilling of SHARS; billing for educational, not medical services; and aggressive tactics of revenue
maximization consultants. 19. In January, 1993, Relators contacted Ray Gudur, SHARS Specialist with TDH, to inquire about the billing of educational services under SHARS and to report concerns with the billing practices of DELOITTE, including the use of individual billing rates for groups services. 20. On April 9, 1997 and on April 15, 1997, Relators conferred by phone and in person with Dick Barhem, Special Agent with the Office of Inspector General for the US Department of Health and Human Services. At this and a subsequent extensive meeting, Relators reported that DELOITTE and MCST were over billing the Medicaid Program for medically unnecessary and/or educational services and that proper documentation was not being maintained. They voiced their concerns with local funding matches of FFP, billing of transportation without travel logs, individual billing for group activities and other issues. They also discussed NHIC's failure to monitor and provide adequate training in the claims submission process. 21. On April 8, 1998, Relators filed qui tam action ,SA-98-CA-0311OG , which was placed under seal in the court and served on the United States. In the Complaint and the subsequently served Disclosure Statement, Relators alleged billing violations of Medicaid for SHARS services by DELOITTE, MCST, and NHIC, including transportation but not limited to, individual billling for group services, with no documentation, billing for medically unnecessary
services, improper matching of funds expended, and aggressive third party billing consultants. The Relators provided the United States with examples and supporting documentation of their allegations from the Disclosure Statement, including, but not limited to training material, billing instructions, portions of transcripts of audio taped meetings, samples and other relevant material. 22. On June 18, 1998, Relators conducted a video conference with DOJ attorneys
Winstanley Luke and Elizabeth Hack. Relators again presented their allegations against Defendants DELOITTE, MCST, and NHIC and supporting information with respect to billing improprieties, transportation charges, physician referrals, documentation and other issues. 23. On January 24, 1999, Relators had a teleconference with Linda Peltz, HCFAMaryland, in which they discussed billing violations in the SHARS program including, but not limited to, improper transportation charges, billing for medically unnecessary services, and the aggressive tactics of the revenue maximization agents, DELOITTE and MCST. 24. On January 27, 1999, Relators also conducted a teleconference with Andy Frederickson, out of the HCFA office in Dallas regarding SHARS billing improprieties, and specific concerns with the individual billing of group services and They also discussed the problems of default billing for transportation and other issues. 25. On February 9, 1999, Relator Scheel spoke with Edward Landicho of the OIG HHS Office in Washington D.C. on her concerns with SHARS billing violations by third party agents. She followed this conversation with a detailed letter of her allegations and observations to Mr. Landicho on February 10, 1999. 26. The above examples of contacts do not reflect all communication with the federal, state and education agencies. Relators, in good faith, tried to apprise themselves of the rules and regulations regarding the proper billing of SHARS and used all available sources to glean information.
BACKGROUND 27. The Individuals with Disabilities Education Act of 1991 (IDEA), reauthorized in 1997, requires that schools must provide each child regardless of disabilities or
income,
with a free and appropriate public education (FAPE).
A FAPE These
includes special education and related services when necessary.
services have been provided by the local school districts with some federal assistance in funding. The Early Periodic Screening, Diagnostic and Treatment ("EPSDT") service is Medicaid's comprehensive and preventive child health program for individuals under the age of 21. ESPDT was defined by law as part of the Omnibus Budget Reconciliation Act of 1989 (OBRA 89)legislation and includes periodic screening, vision, dental and hearing services. In addition, section 1905 (c)(5) of the Social Security Act requires that any medically necessary health care service listed at section 1905 (a) be provided to an ESPDT recipient even if the service is not available under the State's Medicaid plan to the rest of the Medicaid population. 28. Texas school districts have experienced a controversial change in their funding. A movement to equalize the payments received from the Texas for a district's students has resulted in many changes in the school place, including drastic reductions in funding that was previously allocated to many districts. School districts have looked for other funding sources, and Medicaid reimbursement for SHARS is viewed as an opportunity to capture needed dollars. DELOITTE and MCST took advantage of this political situation in Texas to sell their services. 29. Today, in a majority of the states, Medicaid pays for covered services rendered in a school-based setting when these services are medically necessary. In Texas, medically necessary School Health and Related Services (SHARS) are covered under Medicaid. Over 1000 public school district providers in the state receive tens of millions of dollars in federal funds for the rendition of SHARS services to Medicaid-eligible children.
30.
Though Medicaid is jointly funded by the federal and state governments, each state individually administers its own program. Medicaid, enacted by Title XIX of the Social Security Act, is an entitlement program created to provide medical care to pregnant women and children and to needy individuals who are aged, blind, or disabled. individuals Certain basic services to certain categories of eligible The mandatory services include physician must be covered.
services, family planning services and supplies, rural health clinic services, and early and periodic screening, diagnostic, and treatment services (EPSDT) for individuals under the age of 21. Section 1905 (a) of the Medicaid Act lists the mandatory and optional services a state can cover in its Medicaid program. Medicaid is the largest program financing medical and health-related services to the poor in the U.S. Over half of the Medicaid-eligible individuals are children. 31. Under the Medicaid laws and regulations, states, like Texas, are permitted to establish their own state plan and may determine their own eligibility standards, set the rates for payment for services, and determine the amount, duration and scope of services within the general parameters of the federal Medicaid law. SHARS in Texas includes Medicaid coverage and payment for speech therapy, occupational therapy, psychological screening, medical screening, administrative services and assessment services when these services are medically necessary to insure that Medicaid-eligible children have unfettered access to a FAPE and so that these children may benefit from their educational program without medical impediments. 32. CMS policy states that a state Medicaid program may cover health-related
services if they are included in a childs Individual Education Plan (IEP)
providing that : The services are medically necessary; and Covered under a Medicaid coverage category (i.e. speech therapy); and All other Federal and state regulations are followed including those for provider qualifications, comparability of services and the amount, duration, and scope provisions; and The services are included in the states Medicaid Plan or available under EPSDT. 33. In January 1991, TEXAS submitted a plan to Medicaid requesting coverage of SHARS under the federal insurance program. It was approved by CMS on or about September 1992. Rates of reimbursement for SHARS were originally established by the Texas Interagency Council on Early Childhood Intervention. 34. Since 1993, school districts in Texas have organized systems, trained staff and hired outside consultants in an effort to capture reimbursement for these charges from Medicaid. The federal financial participation (FFP), that is the federal GOVERNMENTs share for the states Medicaid expenditures, is generally claimed under two categories- administrative and medical assistance payments. and In Texas the match is approximately 65% federal to 35% state medically necessary services as covered by These monies. With respect to school services, the state match must come from state local funds expended for Medicaid and certified as such by each participating school district. The state match cannot come from dollars expended on educational services. federal SHARS dollars have provided states and their schools with tremendous incentives to become Medicaid providers, to qualify all Medicaid eligible children
in their schools, and to aggressively structure their programs and charge systems so that they can qualify for reimbursement from the Medicaid program. 35. In 1994, DELOITTE was hired by the Texas Education Agency ("TEA") and the Texas Department of Health ("TDH") to develop new SHARS reimbursement rates. DELOITTE's new rates were 13%-164% (an average of 98%) higher than those SHARS rates being used at the time. 36. In fiscal 1994, three billing agents, DELOITTE, MCST, and the Texas Association of School Boards, provided billing and consulting services to 79% of the enrolled SHARS providers in Texas. DELOITTE and MCST continue to maintain a strong, if not dominant, market share in Texas. 37. DELOITTE has within its management consulting area, a component that consults with school districts throughout the United States on SHARS reimbursements from Medicaid. The SHARS component, sometimes known by D&T as the Medicaid Schools Initiative, is headed by David Bankard and/or Al Haight in the Management Consulting Section of a DELOITTE affiliate located at 180 North Stetson Avenue, Chicago, Illinois 60601. Mr. Haight/Mr. Bankard and DELOITTE staff from DELOITTE offices throughout the country offer many services, including, but not limited to, organizing training sessions on Medicaid billing for local school district personnel, consulting with school districts on SHARS revenue maximization, Medicaid administrative claiming, and serving as a third party billing agent for more than 1,500 school districts nationwide. DELOITTE was instrumental in developing the SHARS reimbursement rates for the State of Texas. Additionally, DELOITTE positions itself as being in the business of Medicaid Revenue Maximization.
38.
Until the early 1990s , public school districts had never billed for any of the services provided in the schools , and for the most part, they operate in an organizational culture that is ill-equipped to create the charge systems and billing infrastructure required to efficiently bill Medicaid. DELOITTE has created a powerful and lucrative niche in the SHARS community as a third party billing agent and consultant, often charging up to 20% of amounts recovered from Medicaid on behalf of the school districts. This is not unusual, as school districts are inexperienced Medicaid service providers, and most are only too happy to relinquish these duties to those perceived as being the SHARS billing experts.
39.
DELOITTE is a "Big Five", that is, one of the top five accounting firms in the United States. It is an organization with a wealth of resources and expertise with medical billing. Relators have long contended that DELOITTE'S key role in developing the SHARS reimbursement rates for the State of Texas and then serving as the SHARS billing agent to hundreds of school districts has created an inherent conflict. performance-based. DELOITTE works on a contingency basis (15-20% of The higher the SHARS rates are set, the higher Medicaid recovery) with the school districts, and, as such, its compensation is DELOITTEs contingency fee for billing services. Furthermore, DELOITTE has served as both independent auditor and SHARS billing agent for several school districts, including Fort Worth ISD and Houston ISD. Texas school districts are required to have an annual financial audit by an outside auditor. Under oftrepeated scenarios in districts nationwide, DELOITTE, the independent auditor, has been in a position to audit the work of DELOITTE, the billing consultant. In the wake of egregious accounting abuse involving large U.S. corporations, federal regulators seek to prohibit a professional firm from providing both audit
and consulting services to the same client. In February, 2002, DELOITTE spun off its consulting division into a separate, independent entity in an effort to defuse public outcry and federal regulators' concerns about pervasive conflicts of interest. RELEVANT FACTS AND ALLEGATIONS: 40. NEISD, JISD, SWISD, Northside Independent School District (NISD), San Antonio Independent School District (SAISD), and Edgewood Independent School District (EISD), (collectively the DISTRICTS) are providers of SHARS services in their respective schools. Additionally, the DISTRICTS do Medicaid outreach and bill under the Medicaid Administrative Claiming Program (MAC). The Relators are familiar with many of the practices within the DISTRICTS, other Texas school districts, and other U.S. school districts as the result of personally having provided professional SHARS services in several of the DISTRICTS and through interaction with their nationwide colleagues from 1992 to the present. DELOITTE: NATIONAL INDUSTRY LEADER 41. On or before September 1, 1993 and through May, 2001, NEISD engaged DELOITTE to consult , implement and assist NEISD in the setup of systems to do the SHARS billing of Medicaid. Specifically, DELOITTE was hired to provide various services, including, but not limited to, data collection, claim processing, training, and computer software. 42. During the period of its SHARS contract with NEISD, DELOITTE submitted all SHARS claims for reimbursement to Medicaid. On or September 1, 1998 and through May, 2001, JISD engaged DELOITTE to consult, implement and assist JISD with the setup of systems to do the SHARS
billing of Medicaid. Specifically, DELOITTE was hired to provide various services, including, but not limited to, data collection, claim processing, training, and computer software. During the period of its SHARS contract with JISD, DELOITTE submitted all SHARS claims for reimbursement to Medicaid. 43. From the period September 1, 1992 through the present time, DELOITTE has been engaged by many school districts locally and hundreds of others in Texas. SHARS and MAC billing services were delivered under individual school district contracts or under contracts with the lead school district member of a consortium of smaller districts. Said consortiums, or "umbrella provider models", were prototyped by DELOITTE and have been organized for the specific purpose of billing Medicaid for school services. During the period of its SHARS contract with various Texas school districts, Relators will show that , DELOITTE submitted all SHARS claims for reimbursement to Medicaid for each of their client districts. 44. DELOITTE has over 1500 school district clients nationwide and it prides itself on being the "initial designer and architect of both school-based Fee-For-Service and Administrative Claim Program" in the nation. ( See Exhibit 1,Deloitte's "A Proposal to Provide Medicaid Reimbursement Services" ("PROPOSAL", p. 9), May, 1997) DELOITTE characterizes itself as "uniquely qualified" to process Medicaid claims for schools- "No other firm in the nation possesses the breadth of clients, the experience with this program, of the claim maximization capabilities.." (See PROPOSAL, p. 20). 45. In 1994, the Texas Legislative Board, in assessing the vulnerability of illprepared school districts in the new SHARS environment, reported that " This program [SHARS] is being implemented in a nontraditional setting and the providers (local education agencies and special education programs) are unfamiliar with billing third-party payors (in this case, Medicaid and private health
insurance companies) for health-related services. As a result, there is a greater need for technical assistance and program policy clarification. The Texas Department of Health, the Medicaid operating agency is not familiar with local school district operations, special education services, or the implementation of a medical program in the school setting". 46. In this confused environment it was easy to see why school district clients eagerly relied on DELOITTE's representations that its "knowledge of the Medicaid Programprovides [school district] with the assurance that the claims we file on your behalf will be detailed, accurate, and in full conformance with both State and Federal Medicaid law". (PROPOSAL, p. 10) MEDICAID CLAIMS SOLUTION OF TEXAS: TEXAS BILLING AGENT 47. 48. 49. MCST was the Medicaid billing agent for JISD from approximately 1994-1998. MCST was the Medicaid billing agent for EISD from approximately 1994-2000. MCST served as billing agent and consultant to over 500 school districts in the state of Texas since the inception of the SHARS program in 1992. MCST did not do MAC billing. MCSTs compensation is primarily a contingency fee based on the Medicaid monies recovered for SHARS. MCSTs fees ranged from 10%13%. 50. Gordon Harmon ("Harmon"), the owner and President of MCST, positioned MCST as the company contracted by your school district to help you receive these funds and to make sure that we are abiding by all the rules and regulations and doing what we are supposed to do and me telling you and then being responsible for telling you what you can do and what you cant do.. (G. Harmon Training Presentation for JISD- 8/28/97-1997 MCST Training). 51. MCST was aware of the uncertainty school districts were experiencing in setting up reliable and compliant systems to bill Medicaid. MCST was also aware of
school districts interest in generating new sources of revenue. At the 1997 MCST Training, Harmon made the following remarks tin an effort to reassure the staff of his experience and to allay their fears of improper billing: In response to staffs comments about the additional workload, If were [staff] not doing it [billing Medicaid], whats the biggest reason why were not?.we [MCST] feel that once this [initial] paperwork is out of the way, this is a minimal thing that you would have to do. About less than two minutes would get you $220.So its not big-time paperwork.I know that your time is important, but with the district money situation and its that way all over the state. In response to a psychologist who asks about the consequences of wrongly billing for the supervision time of his psychology trainees, Harmon responds, Theyd [Medicaid/NHIC] probably go ahead and pay ya. If they came in and audited, and found that to be not the way, you dont even have to put it back. Theyd take it back against future services, so theres no penalties. Theyre not going to put you in jail.or take your certificate away or any of that garbage. In response to questions from attendees about jeopardy to professional licenses and personal responsibility for submitted claims, Harmon reassures staff that this program will not be audited and responds,..as far as having him (the psychologist) take responsibility and all that, I wouldnt go that far because it will never have to be With respect to billing for SHARS services and addressing staffs concerns about more paperwork, Were the only company that does a full turn-key job. We do it allIve built my company on that concept. In trying to motivate the staff to bill for services by illustrating the revenue potential of Medicaid billing, Harmon says, NEISD asked me
to give you an idea of what you should be receiving, or could expect to be receiving. This is gonna blow your mind. Gonna blow mine child, the too..The potential of this program with all ten services being tapped into.conservatively at $500 per [Medicaid-eligible] potential for Judson. Thats half a million. DELOITTE: CONTRACT 52. DELOITTE assumed responsibility in its standard contracts for certain pivotal activities, most notably the proper documentation of services and the SHARS claims billing and processing. Other responsible activities included, but were not limited to: Identify, coordinate and conduct revenue enhancement services Identify Medicaid eligible students Develop software to create and maintain a database of all necessary records Design, program, install and operate DELOITTE's proprietary billing system Maintain current files of students who are eligible for services Develop procedures for the recording, documentation and processing of claims Design and present periodic training for school staff on the use and operation of procedures, forms and other methodologies related to the preparation of SHARS claims Data entry of all service tickets and other files required to process Medicaid claims Submit the Medicaid claims to the designated Medicaid Administrator DUTIES AS THIRD PARTY BILLING AGENT UNDER SHARS
53.
DELOITTE explains that the higher-than-the-competition contingency rates it charges are justified because DELOITTE not only processes claims, but provides enhancements and the aggressive pursuit of reimbursement, as evidenced by its track record: "Our close working relationship with State officials allows us to negotiate expansion of the Medicaid Program which benefits our clients" (PROPOSAL, p.18) "Unlike our competitors[DTCG] Staff are consistently available to you to both train and support the ongoing processing of your claim" (PROPOSAL, p.19) "Our involvement .distinguishes our firm from our competitors, who provide only claims processing services.." (PROPOSAL, p.10)SHARS "..our clients in Texas are the most successful ISDs in capturing disproportionately higher Medicaid revenues than are generated by our competitors" (PROPOSAL, p. 10) "As a result of our involvement with Dallas, that ISD's Medicaid reimbursements increased fivefold."
54.
DELOITTE's package of services for its MAC clients includes the "Negotiations with State Medicaid agency and/or HCFA for the purposes of expanding the scope of school district activities which are potentially reimbursable as Administrative Outreach Activities and obtain a signed agreement with the State reflecting the intent to reimburse these school district activities" (PROPOSAL, p. 13). DELOITTE used federal Medicaid monies to underwrite its efforts to lobby state officials and agencies in an effort to secure higher reimbursement rates for a broader span of SHARS and MAC services, which under a performance-based contract would increase DELOITTEs compensation. ( See the definition of
"lobbyist" in Barron's Business Guide, Dictionary of Tax Terms (1994).) 55. Allan Haight and David Bankard of DELOITTE state that the activities and responsibilities listed in DELOITTE's Proposal are ".. standard descriptions of activities which [DELOITTE] and our clients routinely perform in cooperatively developing MAC and SHARS.. claims in the State of Texas . We encourage you to confirm these work activities with any of the Texas client references..provided. We are confident that our references will advise you that DTCG assumes responsibility for virtually every aspect of the claim development process and that only minimal client[School District] support is required by DTCG in developing Medicaid claims." (PROPOSAL, p. 15). 56. DELOITTE represents to its client DISTRICTS that it has the knowledge to insure compliance in claims submission and states ".. we possess the detailed understanding of the Medicaid regulations which is essential in order for school districts to maximize their potential revenues from the Medicaid Program.." (PROPOSAL, p. 9- Letter from Allan Haight, (DTCG Partner). 57. DELOITTE reiterates in its contracts and bombards in its promotional presentations to school districts that, not only is it intimately familiar with Medicaid regulations, but has the inside track since "DTCG maintains a network of specialists at both the State and Federal level who are charged with both preserving and enhancing Medicaid reimbursements for our school district clients". (PROPOSAL, p.20) MCST: DUTIES AS THIRD PARTY BILLING AGENT UNDER SHARS CONTRACT 58. MCSTs primary duties under its standard contract and as delineated in the scope of work for its school district clients, such as EISD, included, but were not limited to:
Determine Medicaid eligibility of children in Special Education Develop and implement a training program for the staff on such topics as Medicaid policies and procedures, progress notes, billable services, audits, compliance issues and orientation for employees Prepare claims for the reimbursement of SHARS claims Provide the school district a capability to validate claims per the rules and regulations issued by Medicaid and the Texas SHARS program Submit claims to Medicaid for reimbursement Serve as billing agent and provide claims summaries to the school district Provide a toll free hotline for customer support DELOITTE AND MCST: TRANSPORTATION BILLING BY DEFAULT 59. Generally, Medicaid will not pay for school-based transportation. Section 1903(c) of the Social Security Act provides, though, that CMS may not prohibit or restrict payment for medical assistance for covered services because such services are included in the childs IEP. the following conditions are met : The child receives transportation to obtain a Medicaid-covered service (other than transportation), and Both the Medicaid-covered service and the need for transportation are included in the childs IEP. 60. 61. Transportation was one of the top three SHARS reimbursable services in terms of total revenue dollars during the relevant periods of this Complaint. During training sessions in 1993-1999 , DELOITTE trained and instructed its client DISTRICTS and their staffs on the financial benefits of including Medicaid is allowed to pay for transportation for school-based services for children under IDEA when both of
transportation as a covered service in a Medicaid-eligible childs IEP when , in fact, there was no often no justification for special transportation for many of the children. Additionally, DELOITTE encouraged staff to maximize transportation recovery by scheduling no more than one SHARS service a day, thereby increasing the number of transportation charges per week. 62. During all times relevant to this Complaint and for all client DISTRICTS, Relators will show that DELOITTEs software billed automatically for a childs transportation on those days Medicaid services were provided at school. Relators were apprised by DELOITTE and by school administration that the software program had a default that billed a transportation charge on any given day when a SHARS service was entered into the system for a child with transportation in their IEP. This made it unnecessary for staff to do anything to get the transportation billed. No transportation logs were maintained, and there is no documentation to support that any SHARS child actually rode the bus or other special transportation in the DISTRICTS during all times relevant to this Complaint. During the time DELOITTE administered this default billing for round trip transportation, there was no documentation to reflect when children came or left with Mom, Dad or the daycare center van. Relators will show that some Nevertheless, children often had their regular SHARS service substituted on another weekday so they could participate in a field trip or special event. transportation charges would be automatically billed. 63. Relators will further show that , during all times relevant to this Complaint, MCST also billed Medicaid for transportation charges by default, first manually and then with a program adjustment to the billing software. 64. Relators have numerous examples of the default billing for transportation. (See
Exhibit 2). The attached are service delivery forms (SDFs) from JISD. Service Provider #30 performed speech therapy on Krystal and an SDF was completed on 9-7-95 for three sessions. Another SDF was completed for speech therapy on 1-15-96. Both SDFs are signed by #30. Many months later on 6-7-96, an SDF for all of the transportation is being manually billed default. The provider is listed as #30, but the signature is that of the Special Education Supervisor who had no knowledge or documentation to support the charges. She billed under the directions and instructions of MCST resulting in a false claim against Medicaid for the ten (10) transportation charges, but there is no supporting documentation for the charges as required by Medicaid. 65. At the 1997 MCST Training Presentation, Harmon tells the staff, This year were going to do your transportation for you, and you wont have to worry about that anymore. The only thing you will have to do ..is designate.. the transportation eligible children. Because what we will do is we will put it into the system and itll cover all those things that are transportation eligible by service and it will match it up with transportation and well file the claim for you and youll no longer have to worry about it I wanted you to know that there is money for transportation and we will handle that for you. He is referring to the automatic default in the MCST computer program commencing with the school year 1997-98. 66. During the relevant times, DELOITTE and MCST 1) falsely prepared and submitted bills for transportation services to Medicaid even when they were generated by default and when there were no records/documentation or transportation logs to substantiate usage of service; 2) instructed staff how to schedule classes with an eye to spread out the days of service in order to maximize transportation billings: and 3) pressured the staff through their seminars and through the administrators of the DISTRICTS to bill for Medicaid
transportation in violation of professional standards which are the basis of many of the permissible charges. Both DELOITTE and MCST benefited financially as the result of these false transportation charges.
DELOITTE AND MCST: BILLING INDIVIDUAL RATES FOR GROUP SERVICES 67. There are general rate principles that state Medicaid agencies must follow in setting rates for SHARS. Payments must be reasonable and adequate to meet the costs incurred by efficiently and economically operated providers in conformity with state and Federal laws, regulations, and quality and safety standards. The rates should only include the cost of the covered services. 68. In DELOITTE';s claims training sessions from 1993-1997, DELOITTE instructed their client DISTRICTS to bill individual service rates for each Medicaid-eligible child receiving services in a group. For example, in a one hour speech therapy group with five (5) children, where three (3) are SHARS-eligible, Medicaid should be billed for each of three hours. In this example, Medicaid only allows for reimbursement of costs for direct services. DELOITTE instructed the school DISTRICTS' staff to bill for the whole hour rather than prorate the charges to reflect the time spent with each of five children one-on-one. Despite its expertise in the rules of Medicaid billing, DEFENDANT DELOITTE knowingly made, used or caused to made or used, a false record or statement to get a false claim paid or approved by the United States and is liable under 31 U.S.C. 3729(a)(2). 69. Billing for Admission, Review, and Dismissal (ARD) meetings is strictly prohibited by Medicaid. In an August, 1998 training session, Brenda Luske of DELOITTE, explains to staff the multiple billing procedures and comments, "..you might say..gosh, that sure looks like double, triple charging for a therapy session" . She goes on to explain that Ken Crow, DELOITTE representative, " is a great resource because he actually set those things [rates] up.he [Ken Crow]
said it's more difficult to actually plan and conduct a group session that it is just a one-on-one individual session. So they [Ken Crow] actually rolled all that in the rate to make it all allowable. ..one hour of time for each child " Ken Crow adds, "It still comes up time and time again that people really feel like, you know, they're [double billing]But when we did the rate study back in 1990-91 to establish rates, we took individual therapy time, planning time, ARD time and ..all that involved in group Rather than having to keep track of every little thing, we rolled it into one rate..that way it covers ARD time.. within the rate". At all times relevant to this Complaint, DELOITTE had DISTRICTS' staff complete service delivery forms (SDF) for these group sessions, knowing that the rates bundled services, many of them unallowable. DELOITTE later took these SDFs, processed them and submitted them for reimbursement from Medicaid. As such, Defendant DELOITTE has knowingly presented or caused to be presented to an officer or employee of the United States false claims for payment of approval and is liable under 31 U.S.C. 3729(a)(1). 70. MCST followed this same line of billing and instructed staff to bill for each eligible child in the group therapy situation and no direction was given to only bill for "hand-on" time. Harmon justified billing for each child in the group because groups are harder to manage than individual sessions. Relators will show that MCST submitted bills at individual rates for group therapy services. As such, Defendant MCST has knowingly presented or caused to be presented to an officer or employee of the United States false claims for payment of approval and is liable under 31 U.S.C. 3729(a)(1) 71. In a training session in JISD, DELOITTE's Ken Crow is addresses the issue of co-teaching. "That's right , just like you do in group therapy, because that a very
good example of the emphasis back on inclusion, and so that we have 3 kids that we would ordinarily pull out to see in session for speech therapy but because you want to be inclusive, we go into the classroom. You're still trackin' those kids IEP, but you're doing it in an exclusive setting. As long as the reason you are there are those 1-2-3 kids. And you can claim that regardless of the setting- that's a heck of a question.." In this way, DELOITTE instructs staff to bill individual rates for services performed with a child in the classroom where there might be 20-30 other children, but Relators contend that there is no justification for this billing as it should be allocated based on "hands-on" time with the child. 72. On March 24, 1998, the Texas Education Agency (TEA) issued a letter prohibiting group billing of SHARS, unless it was for the "hands-on" time with each student. TEA went so far as to warn "Programs that are found to be out of compliance could be required to return funds that were generated by the speech therapy portion of the SHARS Program." This would have entailed a return of significant federal funds, by many of DELOITTE's and MCST's school district clients. DELOITTE contacted state officials to for clarification of this policy. 73. On May 3, 1998, TEA issued another letter "clarifying" the requirements for billing group therapy at individual rates. It stated that the 1) service must be in the IEP, and 2) the student must be actively involved in the therapy during the entire session. 74. DELOITTE and MCST continued to train staff to bill for all children in a group therapy setting and copies of the TEA letter were provided to them. Staff at the various DISTRICTS was left on their own to interpret what "actively involved in the therapy during the entire session" meant from a regulatory perspective. No special instructions or materials were given to staff by either DELOITTE or
MCST to ensure that services were properly documented so as to substantiate that each child received the service specified in their IEP. 75. Relators would show that DELOITTE and MCST continued to submit bills for their school district clients knowing that for most of the group therapy services billed, there was no documentation to support that the service had been performed as specified and for the entire period. As such, Defendants DELOITTE and MCST knowingly presented or caused to be presented to an officer or employee of the United States false claims for payment of approval and is liable under 31 U.S.C. 3729(a)(1)
DELOITTE CHARGES 76.
AND
MCST:
LACK
OF SUPPORTING DOCUMENTATION
FOR
In CMS' publication, "Medicaid and School Health: A Technical Guide" ("Technical Guide"), the United States sets forth guiding principles and procedures for billing Medicaid for SHARS.
77.
The Technical Guide addresses the level of detail that must be included in a student's documentation. It states, "A school, must keep.records that detail client specific information reagarding all specific services provided for each individual recipient. Relevant documentation includes the dates of service, who provided the service, were the service was provided, any required medical documentationlength of time required for service.. and third party billing informationThis information will be necessary in the event of an audit.."
78.
Cathy Barrett , NHIC, in a 9/30/99 training session discusses retention of records, "retain all of your records which should include the following:
details and documentation of the services rendered and when and what services were rendered" 79. The Medicaid Manual for the state of Texas requires that progress notes be maintained when providing SHARS services (Chapter 38). 80. Relators would show that DELOITTE and MCST, in their staff training did not direct providers to maintain the required documentation to support the billing of SHARS services and to support the premise that the services are medically necessary. 81. DELOITTE tells staff that the SDF is the most important documentation, " Once you sign the service ticket, that's the only official record..that's the only documentation." "Keep a record, just a record of attendance and if you have your record [a calendar] of attendance for those kids, then you know ..your backup is your IEP." "All the audit file requires that there would need to be some doctor somewhere in the eligibility file or something that the doctor has reviewed"These instructions do not meet the stringent documentation guidelines of Medicaid for the performance and support of services billed. 82. In August., 1998, DELOITTE's Ken Crow/Brenda Luske answer questions about the minimal documentation in the SDF and the likelihood of government audits, "They [the United States] may come back and say, OK [will audit] , but they never have since I've been doing this, since SHARS has been in effect in 1992, they never have come in and surveyed, sooner or later they will and they'll look at the records. So what do you have to support your SHARS documentation? You have the attendance, you have the IEP". These instructions do not meet the
stringent documentation guidelines of Medicaid for the performance and support of services billed. 83. MCST tells it staff in training meetings with respect to the SDF, "..when it finally gets right down to itthat's the only document that you as a service provider have to deal with. " "They're [ the United States] not gonna question you about what you charged. You are the professionals..they don't worry about that." 84. Even knowing the importance of mandatory record retention, MCST's Harmon instructs the group during a 1998 training session in JISD, to throw away the "pink copy" of a three part SDF, "I wouldn't fill up a file cabinet with 'em, I'd destroy em". He further comments that "Those other people that do this [competing billing agents] have a real paper trail". additional paperwork. 85. Relators have observed that wholly complete. 86. The Districts, under the direct guidance and instructions of DELOITTE and MCST, and under the supervision of NHIC, have billed Medicaid for SHARS services when in fact there was no supporting documentation in the way of progress notes or clinical records to substantiate the claim for reimbursement. The Districts, as a matter of routine practice, only maintain an Individual Educational Plan (IEP) on each child. In Texas , the IEP, developed annually, is where the educational and related services of each child are detailed. In the IEPs, the DISTRICTS are not distinguishing between educationally necessary and medically necessary services. The Districts, furthermore, are not collecting and maintaining a medical chart or comprehensive record with CMS required as a result of DELOITTE'S and MCST's inadequate instruction, the Permanent Student File for many SHARS students is Teaching staff oppose
information such as dates of service, services performed at each contact, and the progress of the child in achieving the goal of the medical service 87. DELOITTE and MCST submitted claims to Medicaid on behalf of their school district clients knowing that the required level of documentation of services was not being maintained and, furthermore, trained the staffs to maintain minimal records of services performed. All the while, DELOITTE and MCST were aware that the school district clients of each was relying on their expertise and knowledge of Medicaid billing. As such, Defendants DELOITTE and MCST knowingly presented or caused to be presented a false statement to an officer or employee of the United States for payment or approval and is liable under 31 U.S.C. 3729(a)(1). DELOITTE AND MCST: BILLING FOR MEDICALLY UNNECESSARY OR NONCOVERED SERVICES 88. Medicaid rules provide that SHARS cannot be billed for physical therapy services unless the child is present. That is, training teachers and aides to use equipment required by a child is not a covered expense unless the child is present. DELOITTE tells staff in it training sessions, that if they have to make anl adjustment on a piece of equipment and they have to leave the room for a few minutes to do it elsewhere, that they should just go ahead and bill it, even if the child is not technically present during the provision of the service, "So you remove the childhave somebody look at it.. bring it backwe're not gonna say, OK once I leave the room, I'm off the clock" 89. DELOITTE's Ken Crow and Brenda Luske coach staff at a 1998 training
meeting to use the phrase "as needed" in the IEP so that as opportunities come up to bill for services, the IEP will cover it. "If they anticipate there may be a
need, there's not a current need , to say this child needs counseling or psych or group therapy once a week, could be just right there , but if you anticipate that the need may occur, then you just put it in the IEP- 'counseling and psych on an as need basis'" . Ken Crow further comments, "..so the opportunity is there for an ARD Committee to, if they're experienced in ..an IEP". 90. MCST's Harmon admonishes his clients that if they are billing less than four to four and half hours for an assessment, "you're cheating yourself". He further encourages them to do an assessment on every Medicaid child and hawks, "Every child that you assess, every child ..that is eligible, qualified for special education, and is Medicaid eligible is worth at least $220. How many students do you have in Special Ed?". Harmon further comments, " Every speech student is worth $1000 a year for thirty minutes a week." 91. More specific information, such as the dates and amounts of each claim submitted by NHIC, is exclusively within the control of Defendant NHIC. Until discovery proceeds, Relators cannot plead with greater specificity. 92. Relators will show that DELOITTE and MCST trained their clients to bill for services even if there was not a medical necessity and when services were not covered. DELOITTE and MCST would submit bills for these services knowing that they were improper. As such, Defendants DELOITTE and MCST knowingly presented or caused to be presented a false statement to an officer or employee of the United States for payment or approval and is liable under 31 U.S.C. 3729(a)(1).
DELOITTE: OVERBILLING FOR NURSING SERVICES
93.
DELOITTE and MCST instructed nurses to bill for what was determined to FAPE, "Free Care", that is for services that are not covered because they must be provided to all children, whether or not Medicaid-eligible. Relators observed that Medicaid was being billed for SHARS that included cleaning a cut, putting on a Band-Aid, or removing a splinter. For the most part, there is no documentation to support any service. Medicaid rules provide that if a service takes less than 8 minutes, it is not billable because one billable unit equals 15 minutes.
94.
In DELOITTE's training presentation in August, 1998, Brenda Luske addresses the fact that the nurses have the most services of any provider group within the school districts. MCST acknowledges the same thing in his session. Both billing agents encourage the nurses to keep records of time no matter how small so that it can be accumulated and then billed.
95.
DELOITTE and MCST would submit bills for these services knowing that they were improper and not sufficiently documented. As such, Defendants DELOITTE and MCST knowingly presented or caused to be presented a false statement to an officer or employee of the United States for payment or approval and is liable under 31 U.S.C. 3729(a)(1).
DELOITTE
AND
MCST:
BILLING
FOR
SERVICES
OF
UNLICENSED
PROFESSIONALS 96. Relators observed that many SHARS services were being rendered by certified educational professionals who were not licensed to practice healthcare within Texas outside of the school environment and who were not properly supervised within the schools in order to meet the billing criteria. In order for schools to participate in the Medicaid program and receive Medicaid reimbursement, they must meet the Medicaid provider qualifications. It is not sufficient to use TEA
provider qualifications for reimbursement of Medicaid-covered school health services. Medicaid regulations require that states cannot have one set of provider qualifications for school providers and another set of provider qualifications for all other providers. The services of uncertified professionals were billed by Defendants DELOITTE and MCST. 97. In a 1998 training session for school staff, MCST's Harmon discusses the importance of billing using the correct procedure code for a person's certification. He acknowledges that MCST has billed for assessments that were miscoded and generated higher revenues. " I'll pick on the speech therapists cause I know I have some of those [submitted claims], and they've gone through [been paid]well, technically, if they ever wee to audit that, they could throw it out because they're (service providers] are not certified under that. They are certified to charge but they charge a little too much by doing it under [Code] 7015X cause it's more than speech." 98. DELOITTE and MCST would submit bills for these services knowing that they were improper and performed by individuals not certified to bill or not properly supervised so that there services were billable. As such, Defendants DELOITTE and MCST knowingly presented or caused to be presented a false statement to an officer or employee of the United States for payment or approval and is liable under 31 U.S.C. 3729(a)(1). DELOITTE: FALSE CLAIMS FOR MAC SERVICES 99. DELOITTE performs MAC services for many school districts. Under the terms of its standard contract, it provides its client school district or consortium the following: Review the client's programs to identify opportunities for revenue enhancement from Medicaid Develop and conduct a Time Study with client personnel for the purposes
of developing formulas for the allocation of cost to Administrative Outreach Claim Train and provide technical assistance to staff Develop forms and procedures for submitting claims Negotiations with State Medicaid agencies for the purposes of expanding the scope of school district services which are reimbursable as Administrative Outreach 100. The DISTRICTS, under the direct guidance and instructions of DELOITTE, have been submitting claims for Medicaid Administrative Claiming (MAC). They have conducted time studies to determine billing rates and MAC rates. Relators would show that Defendants DELOITTE have caused the DISTRICTS to submit inflated charges for activities that were not properly allocable to MAC costs. Furthermore, they have provided poor training for participants further eroding the reliability of the time studies. 101. More specific information, such as the dates and amounts of each claim submitted by DELOITTE, is exclusively within the control of Defendant DELOITTE. specificity. 102. DELOITTE has submitted bills for MAC services for its client DISTRICTS knowing that they were incorrect and inflated. As such, Defendant DELOITTE knowingly presented or caused to be presented a false statement to an officer or employee of the United States for payment or approval and is liable under 31 U.S.C. 3729(a)(1). Until discovery proceeds, Relators cannot plead with greater
DELOITTE : FALSE CERTIFICATION OF STATE MATCHING FUNDS
103.
Relators observed that DELOITTE consulted with its client DISTRICTS on the proper manner to match state and local funds to certify for matching federal funds. Relators observed the improper matching of Special Education salaries and fringe benefits, when , in fact, many of the staff did not perform any SHARS services. The match must come from SHARS services that have been paid for with state or local funds.
104.
DELOITTE has consulted with client DISTRICTS often improperly advising them on proper matches of state and local funds knowingly causing them to submit a false record or certification to the United States upon which payment would be determined and is liable under 31 U.S.C. 3729(a)(1).
DELOITTE AND MCST: OTHER QUESTIONABLE PRACTICES 105. In the 8/1998 JISD Training Session, Ken Crow of DELOITTE and the JISD Special Education Supervisor comment to the group on IEP authorization for counseling and mental health services, "All those behavior adjustment kids..they've all got two hours of time for counseling and it doesn't even say group or individual You can place them all in a 'social skills group', all of those 8 children in a group and they're ARD's for counseling". Ken Crow agrees, "Then that's a counseling session! ..Now that is medically related under the mental health umbrella. Cause you're trying to improve their ability and their adjustment in whatever setting with their peers". and motivated by compensation. 106. DELOITTE is aware that Special Education staff in each school holds the key to the billing and ultimately, their compensation. By and large, school staff is reticent to take on more paperwork. DELOITTE and MCST have found it a valuable marketing tool, to de-emphasize the documentation requirements of Relators observed that DELOITTE's instructions and suggestions to the staff were often aggressive and unjustified,
Medicaid billing in order to ensure the cooperation of school staff. Since staff has no personal financial incentive in billing or not billing Medicaid, DELOITTE uses other techniques to ensure that bills are turned in. In JISD and other DISTRICTS, Deloitte conducts a "Documentation Day" every six months. It is a mandatory workday for the staff and they must show up at a given location with their calendars and pre-printed SDFs to spend the entire day billing. DELOITTE provides raffles and door prizes on Documentation Day in an effort to minimize the staff's resentment at having to do more paperwork. 107. This practice provides DELOITTE a mechanism to control data collection and data entry. For the billing agent, it is a very effective way to get all the bills completed and only requires two meetings a year. DELOITTE brings in their employees to assist DISTRICTS' staff with completion of the SDFs. Once complete, DELOITTE takes the SDFs to their worksite and processes and submits the SDFs for payment. Staff is asked to bring their calendars and IEPS. It is clear that the emphasis is on billling documentation and not medical documentation of the record. Relators would show that DELOITTE's billing practices have resulted in a lack of supporting documentation for services billed. 108. DELOITTE purports in its contracts and promotional literature to have had no denied claims in the time it has been processing SHARS claims in Texas, an unlikely scenario. 109. It can be assumed that there has never been an audit or review of these claims. DELOITTE and instructed the DISTRICTSs and/or its other respective school district clients all over the U.S. on procedures and practices to maximize the capture of Medicaid dollars for SHARS services. This was done in such a manner as to overbill and defraud the U.S. while at the same time maximizing fees for DELOITTE. This resulted in a nation-wide practice by DELOITTE of defrauding the Government for Medicaid services in the school that were, in
fact, not billable under the Medicaid programs guidelines. 110. DELOITTE and MCST, with the approval and under the supervision of NHIC, have billed Medicaid on behalf of the DISTRICTS for purportedly necessary medical services that were not properly prescribed by the child's attending physician. SHARS services in the Districts were prescribed by a physician employee of the Districts who largely never had physical contact with the children for purposes of examination and who often prescribed services with no supporting documentation or testing. Additionally, the Districts would often provide SHARS services to children and bill Medicaid with no signed prescription or referral from a physician(s) in direct violation of Medicaid law. 111. DELOITTE and MCST, under the supervision of NHIC, have billed Medicaid for services that were not medically necessary, but were merely educational, and were, therefore, Program. 112. Under the direct guidance and instructions of DELOITTE and/or MCST, and with the approval and/or supervision of the NHIC, the Districts have billed Medicaid for services that were not medically necessary, but were merely educational, and were, therefore, not subject to reimbursement under the Medicaid SHARS Program. 113. DELOITTE and MCST, under the supervision of NHIC, have billed Medicaid on behalf of the DISTRICTS for purportedly necessary medical services that were not properly prescribed by the child's attending physician. SHARS services in the Districts were prescribed by a physician employee of the Districts who largely never had physical contact with the children for purposes of examination and who often prescribed services with no supporting documentation or testing. Additionally, the Districts would often provide SHARS services to children and not subject to reimbursement under the Medicaid SHARS
bill Medicaid with no signed prescription or referral from a physician(s) in direct violation of Medicaid law. 114. The DISTRICTS, under the direct guidance and instructions of DELOITTE and MCST, brought pressure on RELATORS because of their refusal to bill Medicaid for services that are clearly illegal, non-medical, non-reimbursable, and in violation of professional precepts. The DISTRICTS conducted and continue to conduct extensive training sessions in an effort to increase Medicaid revenues to the Districts. ranks. The refusal of RELATORS to bill created cracks within the difficult to keep a billing RELATORS have been retaliated DISTRICT administrators have found it
discipline within the professional staff.
against by the DISTRICTS and DEFENDANTS with loss of privileges, exclusion from training meetings, public humiliation, and other coercive tactics employed by DEFENDANTS. The facts regarding retaliation are presented here as further evidence of Defendants influence over the DISTRICTS, not as a separate claim for employee retaliation NHIC: CONTRACT DUTIES AND RESPONSIBILITIES 115. 116. 117. NHIC has been the administrator and fiscal agent for the Medicaid Program in Texas at all times relevant to this Complaint. NHIC earned over $99 Million in administrative fees in 1999 Under the terms of the 1995 Title XIX Contract with the State of Texas, NHIC assumed various responsibilities including, but not limited to: Operate a system for the processing and payment of valid Medicaid Claims Reject invalid claims Submit Medicaid claims to the United States requesting payment of
the FFP Monitor the payment of Claims both on a prepayment and postpayment basis Conduct concurrent and retrospective reviews Develop information and instructional materials for the purpose of interpreting to Eligible Providers the nature and scope of the Texas Medical Assistance Program and its policies, procedures, and requirements Employ and assign health care professionals, as necessary, to establish suitable standards for the audit of Claims for payment for services rendered by Eligible Providers Develop and maintain methods of audit and analysis of Claims which reveal the excessive or inappropriate provision of services or unethical practices on the part of Eligible Providers Assure that medical care and services for which payments are made were medically necessary for the diagnosis or treatment of the condition for which benefits were provided Review by health care professionals of all questionable Claims for overutilization or misutilization of services In the event fraud is suspected, conduct an internal investigation to determine if any violation or misutilization has taken place Collect payments made in error and/or make a record of such credit Prepare periodic financial report of Medicaid payments made to Providers Prepare Certification of Expended Funds Letter (attestation that nonfederal funds have been expended in order to receive matching FFP) for SHARS providers and maintain signed copies
118.
NHIC is compensated by the State of Texas for its work as Medicaid administrator in various ways, including : Premiums for coverage groups Adjudication and Transaction Fees per claim Performance and incentive bonuses
119.
With respect to SHARS and MAC claims, it is NHIC's responsibility to monitor submitted claims for accuracy and validity before submitting them for final reimbursement to the United States.
NHIC: SUBMISSION OF FALSE CLAIMS TO MEDICAID 120. NHICs submission of claims to the United States includes an implied certification that NHIC is entitled to these federal funds and that it has complied with all legal requirements of the Medicaid Program. 121. For all times relevant to this Complaint, NHIC has processed and submitted claims to the United States for every SHARS and MAC dollar reimbursed to Texas providers. In 1999, this amount was in excess of $78 million dollars. 122. Despite its contracted duty to provide oversight and review of claims submitted for reimbursement, Defendant NHIC has knowingly provided no meaningful audit or testing of such claims or the underlying supporting documentation. Save for a small number of denials based on the data matching of ineligible provider and recipient identifying numbers, nearly 100% of the SHARS claims submitted for FFP reimbursement by providers were forwarded to the United States and then paid out by NHIC. 123. As an example, SAISDs quarterly Certification of Expended Funds Letters to NHIC for the period from July 1, 1998- December 31, 2001 show that, invariably, SAISD received the maximum corresponding FFP for all claims submitted. There were virtually no claims denied by NHIC.
124.
A further example of NHICs practices are revealed in a 1997 comment made by DELOITTEs partner for SHARS, Allen Haight, During the past five years, DTCG has processed almost $500 Million in Medicaid claims for our 1500 school district clients. Not one cent of those claims has ever been denied or disallowed by the State Medicaid Agency. DELOITTE enjoys a dominant share of the SHARS billing
125.
Defendant NHICs defacto denial of 0% of submitted SHARS and MAC claims is the type of outcome that should normally trigger flashing red lights and an investigation into the statistical probability of such an occurrence. Defendant NHIC, nonetheless, knowingly failed, year after year, to actively investigate, review and/or audit these claims to test for validity and accuracy year after year.
126.
In fact, Relators will show that from 1993-1999, millions of dollars in SHARS and MAC claims were submitted for services that were medically unnecessary, improperly documented, and overbilled. Defendant NHIC has failed to comply with its administrative duties in the monitoring and validation of improper claims, as well as design for comprehensive provider training programs. As such, Defendant NHIC has knowingly presented or caused to be presented to an officer or employee of the United States false claims for payment or approval and is liable under 31 U.S.C. 3729(a)(1).
127.
Furthermore, Relators will show that the matching state and local monies used to certify expended funds to NHIC by the school districts were often monies spent on non-SHARS services and therefore, ineligible for FFP. Defendant NHIC knowingly presented or caused to be presented a false statement that resulted in the avoidance or decrease of an obligation to the United States in violation of 31 U.S.C. 3729(a)(7).
128.
Defendant NHIC submitted SHARS claims for reimbursement to the United States accompanied by signed certifications of compliance representing that
NHIC had complied with all statutory and regulatory requirements of the Medicaid program. NHIC knew that its duties under the state contract were not being followed. Defendant NHIC knowingly made, used or caused to be made or used, a false record or statement to get a false claim paid or approved by the United States and is liable under 31 U.S.C. 3729(a)(2). 129. Defendant NHICs failure to exercise its administrative responsibilities and perform oversight, review, and audit of the SHARS and MAC claims has caused financial damage to United States. NHICs submission of false claims has deprived the United States of monies that were inappropriately paid out. Additionally, as per the terms of its state contract, NHIC was compensated for the higher volume of claims processed as the result of NHICs improper acts. 130. More specific information, such as the dates and amounts of each claim submitted by NHIC, is exclusively within the control of Defendant NHIC. Until discovery proceeds, Relators cannot plead with greater specificity.
FIRST CAUSE OF ACTION Medically Unnecessary Services Medicaid Administrative Claiming Certification of Local Matching Funds 131. RELATORS reallege and incorporate by reference paragraphs 1 through 130 as though fully set forth herein. 132. DEFENDANTS knew of the prohibitions in the Medicaid laws and regulations and against billing for services that were not medically necessary and that were not matched with state or local funds that had been expended for approved medical services. independently Nevertheless, DEFENDANTS, each intentionally and/or RELATORS will show that the violated these regulations.
DEFENDANTS MCST and DELOITTE billed Medicaid for services that were educational and not of a medical or health service nature. They would further show that the redefinition of these services from educational to medical (such as language arts to speech pathology) came about solely for the purpose of justifying medical necessity to Medicaid. RELATORS would further show that the DISTRICTS, with the support of the DEFENDANTS, certified to Medicaid that matching state and local funds had been properly expended for SHARS services. The match used were the total salaries of professionals who provided SHARS services. RELATORS would show that the match was 100% of the salaries even though the professionals were not rendering qualifying SHARS services 100% of the time for their compensation. Additionally, much of the MAC billing that was done under the guidance and instruction of Defendants DELOITTE did not meet the criteria for reimbursement under the Medicaid Administartive Claiming for schools.
133.
Therefore, in regard to these violations, RELATORS would show that the named DEFENDANTS ,DELOITTE, MCST and NHIC knowingly or in deliberate ignorance of the truth or the falsity of the information, have submitted false or fraudulent claims for payment, or caused false or fraudulent claims for payment to be submitted, to the officials of the GOVERNMENT, in violation of 31 U.S.C. 3729 (a)(1). DEFENDANTS have, knowingly or in deliberate ignorance of the truth or the falsity of the information, made or used or caused to be made or used, false records or statements to get false or fraudulent U.S.C. 3729 (a)(2). claims paid or approved by the officials of the United States GOVERNMENT, in violation of 31
134.
Because of DEFENDANTS' conduct set forth above, the United States suffered actual damages. SECOND CAUSE OF ACTION False Certification of Services False Certification and Supervision of Licensed Professionals
135.
RELATOR realleges and incorporates by reference paragraphs 1 through 130 as though fully set forth herein. DEFENDANTS DELOITTE, MCST and NHIC have knowingly or in deliberate ignorance of the truth or the falsity of the information submitted false or fraudulent claims for payment, or caused false or fraudulent claims for payment to be submitted, to the officials of the United States GOVERNMENT, in violation of 31 U.S.C. 3729 (a)(1).
136.
DEFENDANTS used or caused to be made or used, false records or statements with false certifications to get false and fraudulent claims paid or approved by the officials of the United States GOVERNMENT, in violation of 31 U.S.C. 3729 (a)(2) including those which were for professional services performed by unqualified or unlicensed certified. healthcare practitioners and without the proper Many of the services were falsely prescription by a duly authorized physician.
137.
Because of DEFENDANTS' conduct set forth above, the United States suffered actual damages. THIRD CAUSE OF ACTION Unbundled Billing Rates for Group Services
Automatic Charging of Transportation Quality of Care 138. RELATORS reallege and incorporate by reference paragraphs 1 through 130 as though fully set forth herein. DEFENDANTS DELOITTE and MCST designed a scheme to pursue aggressive claims for the reimbursement of charges for services and for the scheduling of services for the primary purpose of enhancing and maximizing reimbursement to the financial benefit the DEFENDANTS DELOITTE and MCST, as opposed to furthering the best interest of the children purportedly being served. In the process, the children received substandard services that were reimbursement-driven instead of need-driven. This included, for example, the automatic billing of transportation services for regular school buses when there was no service log and there was no independent means to corroborate that the service had in fact been provided. At other times, students that had been ill would be required to come in and make up missed therapy sessions all in one day with no regard to what the childs need of capacity for that service might be. This also included the overbilling of services as the result of unbundling when services were provided in a group setting as opposed to one-on-one. rate. DEFENDANTS had the DISTRICTS use individual billing rates when clearly the more appropriate procedure would be to use a group billing This resulted in enhanced revenue for DEFENDANTS MCST and DELOITTE, but also resulted in the delivery of deficient quality of care for the children. 139. Therefore, DEFENDANTS DELOITTE and MCST knowingly or in deliberate ignorance of the truth or the falsity of the information submitted false and fraudulent claims for payment, or caused false and fraudulent claims for payment to be submitted, to the officials of the United States GOVERNMENT, in violation
of 31 U.S.C. 3729 (a)(1). DEFENDANTS knowingly or in deliberate ignorance of the truth or the falsity of the information made or used or caused to be made or used, false records or statements to get false and fraudulent claims paid or approved by the officials of the United States GOVERNMENT, in violation of 31 U.S.C. 3729 (a)(2). 140. Because of Defendant's conduct set forth above, the United States suffered actual damages. FOURTH CAUSE OF ACTION Lack of Documentation 141. RELATORS reallege and incorporate by reference paragraphs 1 through 130 as though fully set forth herein. DEFENDANTS DELOITTE and MCST by their fraudulent and willful acts permitted and encouraged the Districts to bill for services and supplies that were not properly documented in the medical record with respect to medical necessity and a corroboration of having been rendered. These services and supplies were billed in violation of Medicaid regulations because the medical record did not support the charges for services and supplies. 142. Therefore, DEFENDANTS DELOITTE and MCST knowingly or in deliberate ignorance of the truth or the falsity of the information fraudulent claims for payment, or caused false and violation of 31 U.S.C. 3729 (a)(1). submitted false and fraudulent claims for
payment to be submitted, to the officials of the United States GOVERNMENT, in DEFENDANTS DELOITTE and MCST, knowingly or in deliberate ignorance of the truth or the falsity of the information made or used or caused to be made or used, false records or statements to get
false and fraudulent claims paid or approved by the officials of the United States GOVERNMENT, in violation of 31 U.S.C. 3729 (a)(2). Defendants DELOITTE and MCST trained the DISTRICTS to submit charges when, in fact, based on Defendants expertise they knew of the required need for documentation to support the charges. 143. Because of Defendant's conduct set forth above, the United States suffered actual damages. FIFTH CAUSE OF ACTION Billing for Unallowable and Unnecessary Expenses 144. Relators reallege and incorporate by reference paragraphs 1 through 130 as though fully set forth herein. DEFENDANT NHIC participated and supported a fraudulent scheme whereby DELOITTE and MCST, both which developed reimbursement programs for their client DISTRICTS in violation of Medicaid Regulations, were able to submit false and fraudulent claims without the required scrutiny with respect to eligibility and allowability. The fees charged by DELOITTE and MCST the allocation of expenses on the reports submitted for reimbursement from Medicaid were presented in such a way as to indicate they were allowable medical expenses. Therefore, DEFENDANTS DELOITTE, MCST and NHIC knowingly or in deliberate ignorance of the truth or the falsity of the information submitted false and fraudulent claims for payment, or caused false and fraudulent claims for payment to be submitted, to the officials of the United States GOVERNMENT, in violation of 31 U.S.C. 3729 (a)(1). This included, but was not limited to, billing for Medicaid Administrative Claiming (MAC) by DELOITTE when the services provided were no medically necessary
or did not meet the legal criteria for reimbursement. 145. DEFENDANTS DELOITTE, MCST and NHIC did knowingly or in deliberate ignorance of the truth or the falsity of the information make or use or cause to be made or used, false records or statements to get false and fraudulent claims paid or approved by the officials of the United States GOVERNMENT, in violation of 31 U.S.C. 3729 (a)(2). 146. Because of Defendant's conduct set forth above, the United States suffered actual damages. PRAYER FOR RELIEF WHEREFORE, RELATORS, acting on behalf of and in the name of the United States, demand and pray that judgment be entered in favor of the United States against DEFENDANTS as follows: 1. For treble the amount of the United States' damages, plus civil penalties of $10,000 for each false claim; 2. For all costs of this civil action, including attorneys' fees and court costs; 3. For such other and further relief as the Court deems equitable and just. MOREOVER, RELATORS, each acting on her own behalf, demands and prays that an award be entered in their favor as follows:
1. That RELATORS, as qui tam plaintiffs, be awarded the maximum amount allowed pursuant to 3730(d) of the False Claims Act (25% of the proceeds collected by the U.S. if the U.S. intervenes and conducts this action, or for 30% of the proceeds if the U.S. does not intervene) and/ or any other applicable provision of law; for an amount for reasonable expenses incurred by the Relator in the prosecution of this action; and for all reasonable attorney's fees and costs incurred by the Relator;
2. Such and further relief to which the RELATORS may show themselves justly entitled. DEMAND FOR JURY TRIAL Plaintiffs TONI R. BARRON and VICKY J. SCHEEL demand that this case be tried before a jury. Respectfully submitted, By:___________________________ MARLENE M. MARTIN Law Office of Marlene Martin State Bar No. 13093770 Financial Center Northwest 6243 I-10 West, Suite 840 San Antonio, Texas 78201 (210) 737-3997 (210) 737-3990 Fax Katherine Martinez-Vitela Martinez-Vitela Law Firm State Bar No. 20593810 Fed. ID No. 16134 The Gibbs Bldg. 105 N. Alamo Street, Suite 513 San Antonio, Texas 78205 (210) 271-3301 (210) 212-8105 Fax ATTORNEYS RELATORS TONI R. BARRON AND
CERTIFICATE OF SERVICE The undersigned certifies that a copy of the foregoing Amended Complaint was served via first class mail upon the attorney of record of all parties in the above cause in accordance with Rule 5 of the Federal Rules of Civil Procedure on the day of April, 2002, as follows: Regular Mail Patrick O. Keel BAKER BOTTS, LLP. 1600 San Jacinto Center 98 San Jacinto Blvd. Austin, TX 78701-4039 Regular Mail Brittan L.Buchanan HUGHES & LUCE, L.L.P. 111 Congress Ave., Ste. 900 Austin, TX 78701 Regular Mail Michael F. Hertz Joan Hartman Elizabeth I. Hack Civil Division U.S. DEPARTMENT OF JUSTICE Commercial Litigation Branch P.O. Box 261 Ben Franklin Station Washington, D.C. 20044 Regular Mail Alexander Huddleston HOLLAND & KNIGHT, LLP 112 E. Pecan #2700 San Antonio, TX 78205 Regular Mail Wes Loegering HUGHES & LUCE, L.L.P. 1717 Main Street, Suite 2800 Dallas, TX 75201 Regular Mail Winstanley F. Luke Assistant United States Attorney 601 N.W. Loop 410, Suite 600 San Antonio, TX 78216 Regular Mail Robert C. Blume
GIBSON, DUNN & CRUTCHER
1050 Connecticut Avenue NW Washington, D.C. 20036-0539
MARLENE M. MARTIN

Complaint US Ex Rel - Barron and Scheel V Deloitte and Touche Consulting, False Claims Act

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Complaint US Ex Rel - Barron and Scheel V Deloitte and Touche Consulting, False Claims Act

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First Amended Complaint U.S. ex.rel.Barron and Scheel vs.

Deloitte & Touche Consulting Group, et al

manager member is DT-LLP.

DT-LLP and its affliates, including, but not limited to,

DTCG and DTCG

with a free and appropriate public education (FAPE).

includes special education and related services when necessary.

services if they are included in a childs Individual Education Plan (IEP)

DELOITTE CHARGES 76.

DELOITTE: OVERBILLING FOR NURSING SERVICES

DELOITTE : FALSE CERTIFICATION OF STATE MATCHING FUNDS

discipline within the professional staff.

1050 Connecticut Avenue NW Washington, D.C. 20036-0539

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