Natarajan Murugesan, an office manager, decided he was going to save his employer some money. So he found a new vendor that would sell particular products cheaper than his firm's regular supplier. Murugesan's business then used the less-expensive products in procedures with its customers but didn't adjust the amounts it billed for the provided services. The business implied that the higher price products — sourced from the original vendor — had been used in the customer procedures to the payer. Of course, the business now had a larger profit margin, which flowed to the owners. This simple billing fraud eventually caught the attention of the U.S. federal government. Why? Because the firm was the Hematology and Oncology Center PLLC (HOC) of Somerset, Kentucky. The product was a misbranded chemotherapy drug. The payer was Medicare, which doesn't pay for misbranded drugs used in patient procedures. And their transgressions landed them on a dreaded U.S. government "exclusions list."
Why was Murugesan charged?
According to the U.S. Attorney's Office for the Eastern District of Kentucky, HOC pleaded guilty June 17, 2014, to charges of knowingly receiving a misbranded cancer treatment drug.
Murugesan pleaded guilty to aiding and abetting in the introduction of an unapproved oncology drug into interstate commerce. The government found that HOC had violated the False Claims Act by submitting false claims to the Medicare program for misbranded and unapproved cancer-fighting drugs from a Canadian distributor it administered through the clinic from January 2010 through July 2011.
The Canadian distributor, which obtained the drugs from around the globe for use in the U.S., avoided the Food and Drug Administration's (FDA) controls over drug manufacturing and distribution within the U.S. Murugesan was prosecuted under a misbranding provision of the U.S. Food, Drug and Cosmetic Act because the foreign-made, illegally labeled drugs weren't approved versions for U.S. distribution. These laws and rules exist to protect patients, who have to rely on health care workers to use the correct versions of the drugs. If they use incorrect versions, the efficacy of treatments might be affected.
In January 2014, the government ultimately placed HOC on the exclusions list, which the Office of Inspector General of the Department of Health and Human Services (OIG-HHS) maintains. According to the
2014 Health Care Fraud and Abuse Control Program Report, HOC will be on the list for the next six years.
What does 'excluded' mean?
As of March 2015, 2,905 businesses were on the exclusions list. These companies — and any other legitimate businesses that use their services — can't submit bills for services to a U.S. federal government health program (such as Medicare or Medicaid, among others) for payment,
according to the OIG-HHS. Therefore, if a business on the exclusions list continues to provide the same services, its patient population will need to change to self-payers or private insurance payers. Admittedly, as part of the credentialing process, private insurance entities can use the exclusion list to refuse to allow providers into their networks. (See
How Healthy is Healthcare Credentialing? by Mike Rosen, Nov. 15, 2013, The Providertrust Blog.)
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