Fort Myers cancer-care giant to pay nearly $20 million for fraudulent billing, testing practices

Reporter: Sam Smink, Dave Culbreth & Stanley B. Chambers Jr.
Published: Updated:

FORT MYERS, Fla. – A Fort Myers cancer-care giant will pay $19.75 million to settle federal allegations of billing Medicare and Tricare for expensive and unnecessary medical tests, the U.S. Justice Department announced Friday.

21st Century Oncology submitted claims for bladder cancer tests that could total over $30,000 in reimbursements per case, according to the Wall Street Journal.

Half of the company’s U.S. revenue – $646 million – came from Medicare payments, the newspaper said.

“Today’s settlement demonstrates our unwavering commitment to protect the Medicare trust fund against unscrupulous providers,” Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, said in a statement.  “Providers who waste taxpayer dollars by billing for unnecessary services will face serious consequences.”

As part of the settlement agreement, the company is neither admitting or denying guilt, the newspaper said.

“21st Century Oncology’s primary goal is to provide top quality patient care and to that end supports the judgment of our physicians to determine what diagnostic and treatment tools should be utilized for each individual patient based on that patient’s unique clinical needs,” the company said in a statement.

The company added that it has since enhanced their compliance and auditing programs to “ensure transparency and the delivery of the highest quality, most clinically appropriate care to our patents.”

Naples whistleblower

A whistleblower suit filed in 2013 by Benjamin Yormak, a Bonita Springs attorney, on behalf of a former medical assistant for one of the company’s urologists in Naples, exposed the practice.

Dr. David Spellberg, while working for Naples Urology Associates, ordered fluorescence in situ hybridization tests, commonly known as FISH tests, for the majority of his patients – especially those on Medicare, according to court documents obtained by WINK News.

Spellberg is one of four Southwest Florida doctors who participated in the excessive testing, federal officials said. Dr. Meir Daller of Gulfstream Urology, Dr. Steven Paletsky of Florida Specialists in Urology and Dr. Robert Scappa of Scappa Urology were also named by federal officials.

“These tests were ordered to increase profits, not improve the healthcare of patients,” said Special Agent in Charge Shimon Richmond of the Office of Inspector General, in a statement.

FISH tests are performed on urine to detect genetic abnormalities associated with bladder cancer, but court documents allege they are rarely effective.

“After a patient’s urine tested negative for blood in the urine, Spellberg would alter the patient’s electronic medical record to reflect a trace of blood and then falsely claim a diagnosis of hematuria,” the suit alleged, adding that Spellberg sometimes “concealed his false billings by destroying evidence.”

Spellberg ordered the original tests to be shredded, according to the suit.

The alleged actions happened after 21st Century bought Naples Urology, the suit said.

“Upon information and belief, 21st Century also engaged its physicians in competitions, whereby it would pay the physician at the practice who ordered the most fish tests in a particular period, a bonus,” court documents said.

Naples Urology was rewarded with new office equipment in 2011, according to the documents.

“Dr. Spellberg has been a respected and highly regarded urologist in the Naples area for more than 21 years and we will respond to these allegations at the appropriate time and in the appropriate forum,” said Adam Schwartz, Spellberg’s attorney, in a statement. “We are confident that the actual facts in the case will prevail.”

It was also in 2011 that Spellberg was found guilty of medical malpractice by the state Board of Medicine. Spellberg was found negligent in caring for a 72-year-old male patient by not ordering additional tests and scans and by performing surgery without a full and complete evaluation.

Spellberg gave up his medical license after the ruling.

As part of the federal settlement, the whistle blower will receive $3.2 million, federal officials said.

“I think my client is very happy with the result, and happy that taxpayer money was returned to where she feels it should have been from the get go,” Yormak said. “All she wanted to do from day one is do what was right. Without whistleblowers generally, allegations like this would never come to light.”

Underestimating the impact

The Office of Inspector General, which is under the U.S. Department of Health and Human Services, subpoenaed 21st Century in February, asking for medical records dating back to 2007 to determine whether the testing was excessive, the Wall Street Journal said.

21st Century mentioned the subpoena in recent filings with the Securities and Exchange Commission, saying they expected “the range of exposure” to be no higher than $9.4 million.

“Based on reviews performed to date, we do not believe that we or our physicians knowingly submitted false claims in violation of applicable Medicare statutory or regulatory requirements,” the company said in its filings.

21st Century Oncology owns 183 treatment centers, including 148 centers located in 17 states and 35 centers in six Latin American countries. The company reported a $62.5 million loss in cash flow from operating activities in the second quarter, which was an improvement from the $204.6 million it lost last year, according to the Fort Myers News Press.

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