By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law
On October 4, 2017, federal prosecutors charged six Florida residents with running a multi-million dollar insurance fraud scheme through a dozen chiropractic clinics. The alleged scheme involved paying kickbacks to chiropractors and tow truck companies to refer accident victims and then fraudulently billing insurers for services the victims did not need.
An indictment unsealed in Fort Lauderdale charges three of the individuals involved with racketeering, conspiracy to commit fraud and making false statements relating to health care matters. Three additional people were also charged with conspiracy to commit fraud.
Insurance Fraud Scheme.
Prosecutors claim that beginning in 2010, two of the individuals charged, ran a scheme through chiropractic clinics in South Florida that were used to commit automobile insurance fraud. They are alleged to have set up the clinics using licensed chiropractors as fake owners and then paid illegal kickbacks of between $500 and $2,100. Those who received the illegal kickbacks included tow truck drivers, who could solicit car crash victims for the clinics, according to the indictment. Unnamed tow truck drivers and others were paid $2,100 to visit either Yonover’s clinics or Dalley’s law office after they were involved in car accidents.
The accident victims were encouraged to visit the clinics at least 30 times so the clinic owners could receive the largest personal injury protection (PIP) insurance reimbursement, prosecutors said. Prosecutors also claim that two of those charged told employees to falsely inflate the pain levels of accident victims in order to get the insurance companies to pay for the treatments.
If convicted, those involved could receive sentences of up to 80 years in prison in addition to massive fines.
Florida is Serious in Combating PIP Fraud.
Physicians, especially dentists, chiropractors, and optometrists, should always be extremely wary about working for a clinic or medical group owned in any part by someone who is not a licensed health professional. If the clinic, practice or group is owned in any part, even one percent (1%) by a person or business entity that is not a Florida licenced health professional, it may be operating illegally. This includes someone licensed in another state or who has a revoked or inactive Florida license. Dentists, optometrists and chiropractors in Florida have even more restrictions placed on their practices than other health professionals and most other states.
Florida specifically prohibits the corporate practice of dentistry. The key provision in Florida law that establishes this is Section 466.028, Florida Statutes, but the Florida Board of Dentistry has also adopted administrative rules on this topic as well.
Chiropractors have a statutory provision, Section 460.4167, Florida Statutes, that places stringent limits on who may own or control a clinic that involves the delivery of chiropractic services. As a general rule, it prohibits anyone who is not a Florida licensed chiropractor, M.D., D.O. or podiatrist from owning in any part a clinic that employs a chiropractor.
Physicians who are “partners,” “shareholders” or “co-owners” with unlicensed personnel need to ensure they are in full compliance with the Florida HCCLA and all other applicable Florida laws and regulations. Consult with an experienced health lawyer before making an expensive mistake.
To read a prior blog I wrote on a very similar case involving PIP fraud, click here.
Clinics Setting up Phoney Physician Owners Violate the Laws.
We have been consulted by many different dentists, medical doctors and chiropractors who have found themselves involved in clinics owned by or controlled by individuals who do not have any license or any Florida license. Often these situations result in complaints, investigations and prosecutions being initiated against the physician who is unwittingly involved. In one case we were called upon by a radiologist who was sued by the U.S. Food and Drug Administration (FDA) for over six million dollars ($6,000,000) in civil monetary penalties because the real unlicensed owners of an independent diagnostic treatment facility (IDTF) had falsely listed him as the owner to illegally avoid obtaining the correct licensed they needed.
Licensed physicians, chiropractors, dentists and other health professionals must be diligent and make sure that a dental or health care clinic or practice does not list her or him as an “owner” (including a shareholder or member) or officer (including “president” or “managing member”) of a corporation, limited liability company or other business entity unless he or she actually is one. Allowing your name to be used as the owner “for paperwork reasons only” or “for licensure reasons only” or “for insurance purposes only” is just an indication that you are actually aware of and involved in the fraud. An owner “in name only” is merely a “phony owner” or a “straw man owner,” all terms meaning the same thing: for the purpose of defrauding someone.
How can you tell if you are a real owner (shareholder or member), and not merely a “straw man” or “phony owner”? Here are some indicators:
1. You actually paid money to obtain the ownership interest (shares or membership interest).
2. You have a written, signed, dated shareholders agreement or membership agreement.
3. You have stock certificates or membership certificates showing your ownership interest in the business interests.
4. You receive a shareholders or members distribution each year that is reported to the Internal Revenue Service (IRS).
5. You receive a tax document (usually a form K-1 or Form 1099-DIV) annually as a result of the corporate or limited liability company income tax return that shows your percentage interest in the corporation or company and what percentage of the income was paid to you.
6. You will have access to and some control over the books, records and accounts of the business.
Contact Experienced Health Law Attorneys in Matters of Fraud.
The Health Law Firm routinely represents pharmacists, pharmacies, physicians, nurses, chiropractors and other health providers in fraud investigations, regulatory matters, licensing issues, litigation, denials and demands for repayment from insurance companies, inspections and audits involving the Drug Enforcement Administration (DEA), Federal Bureau of Investigation (FBI), Department of Health (DOH) and other law enforcement agencies. It also represents shareholders, members and business entities in corporate and business litigation in state or federal court. Its attorneys include those who are board certified by The Florida Bar in Health Law as well as licensed health professionals who are also attorneys.
To contact The Health Law Firm, please call (407) 331-6620 or (850) 439-1001 and visit our website at www.TheHealthLawFirm.com.
Musgrave, Jane. “Delray lawyer, Boca man charged in million-dollar PIP fraud scheme.” The Palm Beach Post. (October 4, 2017). Web.
Bolado, Carolina. “6 Charged In Florida Chiropractic Insurance Fraud Scheme.” Law360. (October 4, 2017). Web.
About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law. He is the President and Managing Partner of The Health Law Firm, which has a national practice. Its main office is in the Orlando, Florida area. www.TheHealthLawFirm.com The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone: (407) 331-6620.
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