Going Blind to Fraud

KAREN WRIGHT

Optometrist Charles Cooper owned and operated All Eyes Optometry Clinic in a small, rural farming town. Dr. Cooper, tall and very personable, was liked and trusted by his patients. Dr. Cooper's wife, Marilyn, a take-charge country woman, was the office manager. The Coopers' adult children also worked at the clinic.

All Eyes had been in business for more than 20 years when the state tax commission received an anonymous tip that Dr. Cooper had avoided paying income taxes. In December of that year, the commission notified Dr. Cooper that his tax returns from the prior three years would be audited. While the audit was ongoing, Dr. Cooper refused to meet with auditors and failed to provide the requested records. Steve Barton, the audit supervisor, filed affidavits for search warrants of Dr. Cooper's home and business. The search warrants were executed simultaneously, and three police officers were present at each location. Steve Barton read the warrant while local police officers entered and secured the scene. Steve and his team from the tax commission conducted the search.

Deputy Attorney General Joseph Gaston presented evidence seized during the search to the grand jury, which returned an indictment of three counts of felony income tax evasion. Dr. Cooper's defense attorney moved to have the evidence suppressed, stating that the search had been conducted improperly. The defense attorney argued that state law required search warrants to be served by peace officers. The search conducted on Dr. Cooper's home and business had been performed by state investigators who were not peace officers. The police officers had little or no knowledge about the case and performed no meaningful role during the search of the residence or business; they were the token police, which was a relatively common practice at the time. The court agreed and granted the defense's motion to suppress the evidence and quashed the indictment.

Three years later, the case reached the state supreme court, where, ultimately, the trial court's decision was upheld. The case was dead in the water.

Several justices dissented with the majority opinion. They reasoned that tax commission investigators, and even the judge who issued the search warrant, made an honest mistake. This was not an intentional violation of constitutional rights by corrupt government workers. Dissenting justices felt suppression of the otherwise valid evidence was too harsh.

Word of the court's decision spread through state agencies, where numerous civilian investigators were working similar cases. I was an investigator working for the state department of insurance at the time. This decision would have adversely affected one of my cases, if it weren't for the fact we had obtained consent and did not need a search warrant.

The court's decision materially altered the activities of civilian state investigators. No longer could we act as primary case agents when serving search warrants; police officers had to be brought into complex fraud investigations and thoroughly briefed so they understood exactly which documents needed to be seized during searches. Because police officers often carry heavy caseloads involving easily recognizable victims, they needed to be convinced of the criminal aspects of the complex and voluminous fraud cases and of the value of their own involvement. Subsequently, civilian state investigators were not always successful in sparking the interest of police officers.

In the years following the court's decision, the state legislature passed a bill approving the establishment of a Medicaid Fraud Control Unit (MFCU) under the attorney general's Criminal Law Division. Receiving 75 percent federal funding and 25 percent state funding, the MFCU was set up to investigate medical provider fraud. Agents did not investigate welfare beneficiaries but focused entirely on doctors, dentists, home-health workers and other healthcare providers. The attorney general took the state supreme court's decision into account when creating the new MFCU and mandated that some of the investigators hold peace officer status so they could serve their own search warrants.

Popular with the Auditors

Tax issues were not Dr. Cooper's only encounter with auditors or with the criminal justice system. Prior to the tax case, he had come to the attention of a Medicare auditor named Linda Stothers. This stylish petite lady was also a knowledgeable and aggressive auditor. In analyzing the claims data, Linda later told me, “I saw that Dr. Cooper was an outlier, billing services that significantly exceeded the frequency with which they were rendered by all other optometrists in the state. I found that nearly all of his patients had costly optometry tests done without clinical justification. He also unbundled services and billed unnecessary, extended services. Medicare required Dr. Cooper to refund $14,000 and told him that continuation of billing for services not medically indicated and other inappropriate practices could result in his being excluded from participation from the Medicare program.” Provider education of inappropriate billing practices is good evidence in future cases of knowledge and intent. This should have been a warning to Dr. Cooper.

Fifteen years after auditing Dr. Cooper and recovering funds for Medicare, Linda Stothers was working for the state Medicaid program when, unbelievably, “Dr. Cooper again stood out as an outlier for the exact same issues for which he had been sanctioned before,” Linda said. Upon making this discovery, Linda contacted a few local health insurance plans to compare notes. By this time I had left the department of insurance and was working as an investigator for Mountain Health Benefits, Inc., a private insurance company. Mindful of Linda's reputation as a credible auditor, when she contacted me about the optometrist, I was eager to dig into claims data to see what I could find. I searched Dr. Cooper's claim history and found a low number of claims; evidence of fraud just wasn't there. Dr. Cooper had not been billing private insurance in the same manner as he had billed Medicaid and Medicare, so I moved on to other cases.

Having previously educated Dr. Cooper about his inappropriate billing practices with Medicare, which apparently had no effect, Linda did not just publish audit findings and demand a refund from Dr. Cooper this time around. She referred the case to the new MFCU as a suspected fraud. The MFCU investigator assigned to the case, Brian Grant had recently graduated from the peace officers standards and training academy. As luck would have it, he would turn out to be instrumental in the investigation against Dr. Cooper, whose previous state supreme court case contributed to the creation of Grant's own job. Though still quite young compared to his colleagues, Brian Grant was not only a peace officer; he was a Certified Public Accountant (CPA) and a Certified Fraud Examiner (CFE).

Mountain Health Benefits was a nonprofit health insurance company offering a full line of products, including major medical, vision, dental and pharmacy benefits to employer groups and individuals. It also offered a Medicare replacement plan.

The fact that Mountain Health did not initially have much in claims exposure in response to Linda's inquiry was significant because most private insurance carriers offer separate coverage for vision services. Typically, vision coverage allows for a yearly eye exam and glasses or contacts. If the patient has a medical diagnosis, such as glaucoma, the claims can be processed through major medical coverage, which pays at a higher rate and has higher limits. Usually a private insurance carrier would not see a large number of high-dollar claims submitted to major medical coverage by an optometrist.

A year or so after Linda's Medicaid audit, Mountain Health suddenly began to see a significant increase in claims submitted to major medical by Dr. Cooper. Whether because of the Medicaid audit or because Mountain Health offered him a contract as an in-network provider for the Medicare replacement plan, I'll never know. (Patients with Medicare replacement plan coverage are covered only if they use an in-network provider. The Medicare replacement plan contract allowed Dr. Cooper access to this expanded patient population.)

This sudden increase in claims first came to my attention through a provider contract specialist, Lisa Rogers, who had been with Mountain Health for some time and had a lot of expertise in Medicare. Her job was to contract with medical providers for the Medicare replacement plan. Lisa was also an asset to this case because she had previously worked in an optometrist's office.

Second Opinion

Lisa selected a sample of claims for six of Dr. Cooper's patients and requested supporting medical records. After receiving the records, Lisa sent them to an external expert, Dr. Dawson. The review was double blind, meaning the expert did not know Dr. Cooper's name and none of us knew the expert's name until after he conducted his review. Dr. Dawson's report was scathing, with comments like these:

• “There are no findings consistent with glaucoma, nor reason to do so many tests and to have repeated them.”
• “There is overutilization of services. There is clearly an unnecessary and unfounded diagnosis of glaucoma.”
• “There have been no records convincing of glaucoma nor is there seen any treatment started.”
• “There is an outrageous abuse of medical necessity in this case, with overutilization of tests performed.”
• “Clearly there is an overdiagnosing of a glaucoma condition that does not seem to exist.”

Mountain Health's special investigations unit had purchased a fraud detection software product that used predictive analytics to review claims histories and detect outliers. It filtered claims data through various questions to compare providers to their medical specialty peers, producing a detailed report for each provider. Lisa asked me to take a look at Dr. Cooper with the fraud software. Rachel Shipley, our fraud software “superuser,” who was also an experienced nurse and computer techie, created a model to look at optometrists submitting claims to our major medical plan. The results showed that Dr. Cooper was off the charts for optometry testing and for diagnosing patients with glaucoma, the second leading cause of blindness. In his entire state, this small-town optometrist had the most patients with glaucoma-related diagnoses, he billed for more glaucoma-related tests than any other optometrist and he ranked number one in the entire state for total dollars paid.

Lisa and Dr. Dawson met with Dr. Cooper and his wife and confronted them with the independent medical review report. In relating the meeting to me, Lisa said, “We waited for Dr. Cooper to provide a reasonable explanation. Dr. Cooper suggested he had been billing glaucoma because he was trying to rule it out (which has not been a practice in the healthcare field for decades and would not explain the repeated tests). Mrs. Cooper attempted to blame the problem on a former employee who did the billing.” This also would not explain the repeated tests. Blaming a former employee is the single most common explanation for questionable billing practices I hear from providers. Other than those comments, Lisa said, “Dr. Cooper and his wife offered very little during the meeting.”

We concluded that our original sample was insufficient because it had focused only on claims for the Medicare replacement plan. We needed to look at Dr. Cooper's claims for our commercial products. My supervisor asked me to officially take over the case and conduct an onsite audit of All Eyes Optometry.

The First Visit

I conducted a thorough background report on All Eyes Optometry Clinic and Dr. Cooper. I extracted data from our claims processing system and imported it into a spreadsheet. I sent a list of Dr. Cooper's patients to our internal audit department to pull a statistically valid random sample using our sampling software, which selected 30 names. I then sent a certified letter to Dr. Cooper notifying him of the upcoming audit, providing some possible dates and asking him to respond within two weeks. Thinking back on my days as an investigator for the department of insurance, I cringed at the thought of giving a provider the opportunity to alter records by announcing our visit beforehand, but this was required by our provider contract. In accordance with our policy, I did not provide him with a list of names in advance, and Dr. Cooper had a very large patient population.

Once the letter was in the mail, I began researching optometry, glaucoma, optometry tests, the type of equipment that optometrists use and vision insurance coverage. Dr. Cooper's deadline was fast approaching when I received a call with a familiar voice from the past. It was Carter Phillips, a well-known local defense attorney who had handled some very high-profile cases, including one of my cases with the department of insurance. Carter explained, “I represent All Eyes, and they sent me a copy of your audit letter.” Carter and I then scheduled the audit. He didn't question the fact that I would not provide patient names other than to say “Well, if you want to let us know in advance, great, but if you don't, we will be happy to do it however you want to do it that day.” He was, however, going to be present during our visit.

We scheduled my site visit first thing in the morning on a cold winter's day. Concerned about being punctual, I stored our scanner in the trunk of the car the night before. It was critical to be professional and polite during the clinic visit and for everything to run like clockwork. A site visit like this typically takes three investigators. In addition to Rachel, I brought Carmen Sadler, a highly reliable investigator and a cheerful woman willing to do whatever was needed to get the job done. When we arrived at All Eyes, we introduced ourselves to Carter and presented our list of patient names.

While staff located the files we requested, we set up our scanner but when we turned it on, the screen was black . . . not good. After rebooting it several times, the scanner finally started working. I made a note to myself — never leave a delicate piece of electronic equipment in the trunk of a car on a cold winter's night. I took a tour of the clinic with Carter and Marilyn Cooper. Dr. Cooper was conspicuously absent. I snapped pictures of the equipment and exam rooms to demonstrate whether Dr. Cooper had the equipment needed to perform the services for which he billed. While Rachel and Carmen scanned patient files, I interviewed Marilyn and Carter. We did not finish in one day and returned a few days later. Once we finished scanning all the patient files, we conducted a quality check to ensure we scanned every page correctly.

Audits and Reports

Upon returning to the office, I made a CD of the scanned records and sent it to Carter. I then began performing a desk audit by organizing records in chronological order and reviewing each patient file to get an understanding of what was in the files. On the second pass, I compared each date of service to the corresponding insurance claim. During one of these passes I noticed the intraocular pressure (IOP) test, which is the primary indicator of glaucoma, had been altered in numerous patient files. I also found many test results were missing and several other services billed for had not been documented. The records consistently mentioned eye drops used to treat glaucoma, but the files contained no copies of written prescriptions. I reviewed patient claim histories and found no claims for glaucoma drops and no other doctors treating the patients for glaucoma. This couldn't be. From my research, I knew glaucoma had to be treated with drops to prevent progression of the disease. Not to treat glaucoma would be malpractice.

In the following months, we ended up returning to All Eyes two more times to scan more patient files. I found more altered IOP measurements, but I also found something else — tests we had not seen in previous files. After several reviews of files and comparing them to claims, the additional tests started to look familiar. I took a couple of the graph tests, put one on top of the other and held them up to the light. They were exact clones, except for the patient names and dates of service. I had seen this in insurance broker fraud cases but never before in a healthcare case. I went back through all of the records looking for documents that appeared to be photocopied and found two types of tests. One was a handwritten Farnsworth colorblind test, and the other was a computer-generated visual-field test. No two of these tests should look exactly the same for different patients.

At the end of several months, I produced two audit reports, the first addressing events leading up to the investigation and the results of my audit for our commercial lines of business and the second addressing my audit findings for our Medicare replacement plan, including the cloned tests. I supported the audit reports with source documents, each referenced as a specific exhibit. The audit reports with exhibits consisted of seven large binders and were available in electronic format.

The total loss identified thus far for 55 patient files was around $15,000. Since my background was in investigations, not healthcare, I based my findings entirely on whether a service was documented or whether a claim was supported with a cloned test result. Even when the IOP had been altered, I could not conclude that a glaucoma diagnosis was inappropriate. I suspected, however, that almost all of the files contained false diagnoses, and as such, almost all of the testing billed would have been unnecessary. That amount was in excess of $100,000.

Fraud Referral

Because of the cloned tests, altered records and lack of glaucoma treatment, I suspected fraud. In the wake of healthcare reform, the terms fraud, waste and abuse have been thrown around as a single concept — FWA — but they are not the same. Waste can be explained by a simple example. Imagine using a small amount of an expensive drug from a large vial, throwing away the rest of the drug and then billing the entire vial to insurance. An example of abuse would be giving every patient the same panel of lab tests, regardless of whether the patient needed them. Fraud is intentionally submitting a material lie in support of a claim for money or benefit to which the provider is not entitled.

In cases of waste or abuse, we typically tried to recover overpayments and educate providers. In cases of suspected fraud, we had certain obligations, including reporting suspected fraudulent claims to the state department of insurance. If the suspected fraud involved our Medicare replacement plan, we were required to report it to the MEDIC, the Centers for Medicare and Medicaid Services (CMS) contractor responsible for overseeing all Medicare replacement plan anti-fraud activities. We were audited regularly by the department of insurance and CMS to ensure we were in compliance. I held a meeting with my audit team and concluded that we were obligated to report Dr. Cooper for suspected fraud.

One of the drawbacks of leaving the public sector to work for a private company was Rule 6(e) of the Federal Rules of Criminal Procedure, which established rules for grand jury secrecy. Basically, now that I was no longer a government investigator, I could not be privy to grand jury investigations. Let me tell you, it was quite a shock to be left standing out in the cold. Because of Rule 6(e), I was unaware of how deeply involved agents from Health and Human Services, Office of Inspector General (HHS OIG) and the Federal Bureau of Investigation (FBI) were in their investigation of Dr. Cooper.

I was to learn later that about the time we were making site visits and auditing records, federal agents were interviewing Dr. Cooper's Medicare and Medicaid patients. They also interviewed some of his employees. In addition to Brian Grant, the MFCU investigator, Joni Sweeny, special agent with the HHS OIG, and Robin Miller, a special agent with the FBI, were investigating. Joni, who I had worked with before, was tall and slim with a fresh, midwestern look. Robin, who I had met but not worked with, was petite and looked like she could have been anywhere from her teens to her early 30s. They were both bright, professional and exactly what one would hope for in two federal agents. After the conclusion of the case, I learned more about what these agents had been up to.

According to Agent Sweeny, when she interviewed one of Dr. Cooper's former employees in October that year, she asked her to keep the interview confidential and not tell the Coopers, but tell them she did. Agent Sweeny said, “This tip-off coincided with a major switch in billing practices by Dr. Cooper.” He virtually stopped submitting claims with glaucoma or a glaucoma-related diagnosis. Dr. Cooper's billing for glaucoma never returned to previous levels, but he significantly increased billing for tension headaches, pain in and around the eye, optic atrophy, punctate keratitis and nonexudative macular degeneration.

Similarly, I had been pulling updated claim histories in response to a subpoena I received after referring the case to law enforcement, and I noticed an abrupt change in Dr. Cooper's billing pattern. He virtually stopped billing Mountain Health for glaucoma on September 24, just one day after Dr. Dawson and Lisa Rogers confronted him with the independent medical review report.

Armed with additional information from private payers with subpoenas, the agents continued with their investigation and interviewed numerous Medicare, Medicaid and private-pay patients. Only one in ten Medicare patients interviewed was appropriately diagnosed with glaucoma and was being treated for it, which falls in line with the national average of less than 10 percent for Medicare-age clients. We found parents who told us that Dr. Cooper diagnosed their children with glaucoma but said he wanted to monitor it, not treat it. Glaucoma occurrence among juveniles is extremely rare at less than 1 percent of the population.

Federal agents hired an expert who examined the children and found no glaucoma or related conditions in any of the cases. Agent Sweeny told me, “One particular Medicaid patient, a ten-year-old girl, was so distraught after being diagnosed with glaucoma, she cried with her mother about the diagnosis. Even after being examined by our expert and told she did not have glaucoma, she still believed she would go blind.”

Agents compared Dr. Cooper to all other providers in the state, not just optometrists, and found that Dr. Cooper saw 4 percent of the Medicaid population but billed for 92 percent of the total Medicaid population with glaucoma. However, glaucoma-related conditions were not the only diagnoses Dr. Cooper apparently falsified: His patients with acquired color deficiency accounted for 99 percent of the state's Medicaid population with that diagnosis. Just as I had found, agents identified copied or cloned tests. They found 141 Farnsworth colorblind tests in 109 files consisting of 14 distinct photocopied tests. Agents also identified falsified diagnoses of primary open-angle glaucoma, chronic angle closure glaucoma, optic cupping, acquired color deficiency, photokeratitis, trichiasis, superficial injury of cornea, recurrent erosion of cornea and pre-glaucoma.

Tallying the Losses

Brian Grant, the MFCU investigator, was instrumental in coming up with a unique way to identify the loss amount by focusing on Dr. Cooper's change in billing practices. At the conclusion of the case, Brian explained, “We knew that Dr. Cooper's scheme was to diagnose patients with something they didn't have and then bill for tests they either didn't need or he didn't do. The problem was that he was also providing some legitimate services.” To separate the legitimate services from the fraud scheme, Brian created a spreadsheet. Focusing on the primary diagnoses, Brian listed the patients Dr. Cooper saw with a particular diagnosis and what he was paid for that patient's visits each month. Brian explained, “I had about 12 diagnoses I was looking at. Once I had all the data entered, I graphed it out and noticed that he would use a certain diagnosis for a while and then switch to something else. It was especially blatant when his employee told him he was being investigated. He dropped all the diagnoses he had been using and started with new ones.” The total loss amount Brian identified after weeding out the legitimate claims exceeded $1 million.

Olivia Walsh and Michael Kelson were the Assistant U.S. Attorneys handling our case. AUSAs Walsh and Kelson were two of the best prosecutors I have ever had the pleasure to work with, and they easily comprehended complicated and voluminous fraud cases. They presented the case to the grand jury, and Dr. Cooper was indicted on 105 counts of executing a scheme to defraud a healthcare benefit program under Title 18 United States Code § 1347. The indictment alleged that Dr. Cooper “defrauded Medicaid, Medicare, Mountain Health and two other payers of more than $1 million in healthcare benefits program reimbursements, by making material false statements, and by submitting material false, fraudulent and fictitious claims for reimbursement to these healthcare benefits programs.”

After several trial postponements and months of negotiations, Dr. Cooper pleaded guilty and was ordered to pay $1 million in restitution. According to the sentencing memorandum, “Each fraudulent billing required the creation of false medical records.” False records not only existed in Dr. Cooper's office but also in the files of several insurance companies. The sentencing memorandum pointed out that those records “may follow the patients into the future, affecting their future medical care or their future ability to obtain affordable insurance.”

At his sentencing hearing, Dr. Cooper took sole responsibility and said, “It was definitely greed that prompted my actions. I just got caught up in it, and couldn't get out.” In sentencing Dr. Cooper to three years in federal prison, the judge said, “It would appear what happened here is out of character for you, but when you think about it, it's your perceived character that made it possible for you to do what you did.”

Mountain Health received more than $30,000 restitution, which was substantially less than the company's actual losses but fair considering losses to Medicaid and Medicare.

About the Author

Karen Wright works for a health insurance company investigating fraud, waste and abuse. Ms. Wright's experience includes serving in the U.S. Army Military Police, as a Medicaid Fraud Control Unit investigator, as a trial assistant in the prosecution of complex crimes and as an investigator with a state insurance department. She became a Certified Fraud Examiner in 2002.