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VOL. 125 | NO. 27 | Wednesday, February 10, 2010

Good Deed Punished

Reporting colleague’s wrongdoing has eye practice in hot water

By Tom Wilemon

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Doctors and managers at the Eye Specialty Group can’t help but question their decision to turn in a colleague for Medicare fraud.

Doing the right thing, they said, has been a costly business decision.

The practice now has to pay back hundreds of thousands of dollars to the federal government, write off about $300,000 worth of expired drugs and cover the costs of an internal investigation plus a civil lawsuit against Dr. Seth Yoser, the partner they reported to authorities.

Meanwhile, Yoser continues to practice medicine.

“The basic issue is we turned in a criminal and now we are paying for it,” said Dr. Andrew Mark Krauss.

Yoser pleaded guilty in July to 35 counts of federal fraud charges as part of a plea agreement and was scheduled to be sentenced in November. That sentencing has been repeatedly postponed and is now set for Feb. 18.

Laws, rules

The federal government in its indictment said Yoser diluted dosages of eye injection medicine, falsely billed Medicare for the amount of medicine used, then removed the medicine from the practice and sold it elsewhere. In total, false billings of about $1.6 million were submitted to Medicare, prosecutors said.

Yoser’s former partners cannot understand why the Tennessee Department of Health is still allowing him to practice. The state regulatory body for doctors will not say whether a physician is under investigation, said Shelley Walker, a spokeswoman for the state agency.

“There is no state law, nor is there any rule within the boards, for health professionals that automatically prompts action against a licensed health professional for a criminal conviction,” Walker said. “In other words, a criminal conviction or even an arrest does not prompt automatic action against the health professional’s license.

“There are two separate and kind of parallel systems. If no action has been taken against Dr. Yoser’s license, then he would still be allowed to practice in Tennessee, despite having been convicted of fraud.”

In the civil suit that Yoser’s former partners filed they accuse him of performing dry needle, or “fake,” eye injections on patients. Yoser disputes these allegations in the civil suit, said Daniel Warlick of Nashville, his attorney.

Yoser “specifically denies making fake eye injections on patients” and “further denies using substandard doses of medication or engaging in substandard practice,” Warlick wrote in an answer to the civil complaint.

However, Yoser did plead guilty to distributing drugs to Tennessee, Arkansas, Texas and Louisiana in violation of federal laws. He allegedly sold drugs back to Eye Specialty Group after taking them from the practice. Yoser admits taking what he called “leftover” drugs in a reply to the civil suit.

Drug switches

One of the drugs, Lucentis, is used to treat wet macular degeneration, a disease that can cause the rapid onset of blindness. It costs around $2,000 a vial. One vial is intended for the injection of a single patient.

Thomas G. Brown, the practice administrator for Eye Specialty Group, explained how Yoser circumvented a control system by taking labels off boxes and using them improperly.

“On a given day, he would pull 20 boxes of Lucentis out of inventory, take all the stickers off and put them on a piece of paper,” Brown said. “He would take 10 of the boxes and set them off to the side. He would take 10 other boxes and pull up his injections for the day – 20 injections out of 10 boxes. He would then give those 10 boxes – the 10 that he didn’t use – to the outside vendor. He would get that vendor then to offer those 10 boxes back to us.”

The vendor, Medical Solutions LLC, and James Baize, a salesman for the company, are also named as defendants in the civil suit. Baize and Medical Solutions dispute the allegations made in the suit.

Although the criminal indictment mentions Medical Solutions in the context of Yoser’s criminal activity, Baize’s name does not appear in the indictment and he has not been charged with any crime as a result of the federal investigation.

Punished for doing right thing?

Eye Specialty Group learned Yoser was administering more than one dose per vial of Lucentis in May 2008, Brown said, and then launched an internal investigation.

The practice learned about the theft of the drugs and the illegal billing to Medicare through the investigation and then turned the evidence over to federal authorities.

The practice was initially held responsible for reimbursing Medicare all that was owed but has since verbally agreed to a lesser amount. Warlick said his client has reached a civil agreement with the federal government.

However, under terms of the sentencing agreement related to the criminal charges, the court may consider restitution. Eye Specialty Group has filed a “declaration of victim loss” statement with the court seeking $569,579 in restitution.

But the practice is dealing directly with the Centers for Medicare and Medicaid Services in having to reimburse for the false billings.

The U.S. Food and Drug Administration kept the practice’s stolen medicine as evidence then returned it after it had expired. That’s about a $300,000 loss for the practice.

Eye Specialty Group is also dealing with a decline in income from the loss of Yoser’s business.

“We are going to have to pay a fine,” Brown said. “We’ve lost assets. We’ve had to pay the lawyers. We’ve had to pay the private investigators. And now the debt that Dr. Yoser was a cosigner on he’s been released of.”

Each of the partners has taken on a greater portion of debt for the mortgage on their East Memphis office building.

“The frustrating part for us is we feel like we’ve been good corporate citizens,” Brown said. “Admittedly, this guy was defrauding the Medicare system while he was under our watch. But as soon as we became aware of it, we suspended him within 24 hours of knowing it. As far as what we could do, we put him out of business.

“Within a couple of months after we had completed our investigation, we turned our stuff over to federal authorities. Our frustration is that in exchange for doing what we thought was best, we are now in a position where we are going to get fined for something and this doctor is still out practicing.”

Dr. Subba Gollamudi, the chairman of the practice’s executive committee, characterized the state allowing Yoser to continue practicing as a “perfect example of medicine not policing itself.” He wonders if the practice might have fared better financially to issue a stern warning and “turn a blind eye” to what Yoser had done.

“I’m a good American citizen,” Gollamudi said. “Would it frankly have been easier and less expensive for me and my partners – though not morally justifiable – to say to him, ‘Stop doing it?’”

Brown, Gollamudi and Krauss said the practice decided instead to “do the right thing.” But, said Krass, “At this point, we are in significant negative territory.”

MORTGAGES 0 48 4,862