Excessive medical tests centered around ‘office pool’ for bonuses

FORT MYERS, Fla. It was essentially an office pool to determine which doctor could get the most bonuses.

The bet centered around patients who didn’t know if they had cancer.

The winner? Dr. Meir Daller of Gulfstream Urology.

“Dr. Daller was the No. 1 referring physician in the United States,” said Kyle S. Cohen, assistant U.S. attorney for the Middle District of Florida. “It’s hard to say exactly, but over 13,000 [patients].”

Daller was one of four Southwest Florida doctors participating in excessive medical testing while working for Fort Myers-based 21st Century Oncology, federal prosecutors said.

Company doctors billed Medicare and Tricare for expensive and unnecessary bladder cancer tests that could total over $30,000 in reimbursements per case. A 2013 whistleblower suit, filed by employment attorney Ben Yormak, alleged the tests were rarely effective.

Daller will pay $3.8 million to settle with federal prosecutors. In addition, any changes he makes to a patient’s medical record will have to be independently reviewed.

The amount is almost double the approximately $2 million he received in bonuses.

Federal prosecutors tweeted the settlement early Wednesday afternoon:

Ft Myers urologist agrees to pay $3.8M for ordering unnecessary medical tests. https://t.co/zpBWmbljfi pic.twitter.com/lv8WlTSV7a

— USAO Middle Florida (@USAO_MDFL) February 1, 2017

“Dr. Daller is delighted to have this entire experience behind him,” his attorney, Jack Fernandez, said in a statement. “He appreciates his patients and colleagues who’ve trusted him and never doubted his commitment to providing the highest quality care possible to his patients.”

Set bonuses

Patients visited doctors like Daller for a fluorescence in situ hybridization test, or FISH test, to determine if they had bladder cancer.

“When you have a urinalysis done, it comes out of the machine, the results, like a little receipt,” Cohen explained. “A lot of doctors would put that receipt in the medical file so you could see it. Others would write it into the electronic medical record. What the whistleblower was alleging was that the doctor would take the receipt and look at it, throw that receipt away, and put into the electronic medical record whatever they wanted.”

Patients who did not have blood in their urine would be marked as if they did, Cohen said.

“The reason that a lot of these unnecessary tests were ordered was due to the fact that the doctors were receiving bonuses based, in part, on the number of tests,” he added. “It wasn’t like a lottery where you would win the pool. It was a set amount that they would receive in bonuses based in part on the number of referrals to a 21st Century laboratory.”

The tests cost Medicare between $700 and $1,000 each, Cohen said.

“There were a number of times when that was overutilized by 21st Century in a way that wasn’t medically necessary and sometimes that was used in a way that the doctors had no use for the results that they were getting,” he said.

Daller, along with Dr. David Spellberg, formerly of Naples Urology Associates ($1 million), and Dr. Robert Scappa of Scappa Urology ($250,000), will pay more than $5 million combined after settling with federal prosecutors.

Dr. Steven Paletsky of Florida Specialists in Urology has yet to settle with the government.

Combined, the four doctors ordered over 20,000 fish tests, Cohen said.

Daller ordered more than 13,000 tests alone since 2009, federal prosecutors said.

All of the patients lived in the Fort Myers area, he added.

“It involved a lot of people because 21st Century Oncology is headquartered here in Fort Myers and it’s hard to find a urologist in this town who’s not affiliated with them as an employee,” Cohen said.

Spellberg, Scappa, and Paletsky could not be reached for comment. 21st Century did not respond to a request for comment.

Embattled company

21st Century agreed to pay nearly $20 million in December 2015 to settle federal allegations of billing Medicare and Tricare for the tests.

A second settlement in March 2016 resulted in 21st Century paying nearly $35 million to the federal government to settle a dispute involving training protocols of certain staff in the utilization of a radiation dose calculation system.

Days after the second settlement was announced, the company said patient information was illegally obtained through a security breach into the company’s database. At least 2.2 million patients were affected.

FBI agents notified 21st Century of the security breach in December 2015, one month after investigators believe the intrusion occurred. But the company did not notify the Securities and Exchange Commission until March 2016, according to one of five class-action lawsuits filed about two weeks after the announcement.

The plaintiffs are asking for more than $15 million from 21st Century, accusing the company of multiple violations including negligence, unjust enrichment and breach of implied covenant of good faith and fair dealing.

21st Century named a new CEO in September 2016 but didn’t say whether company founder Dr. Daniel Dosoretz was forced out of his position.

Cohen credits the whistleblowers for exposing the practice to federal authorities.

“We’re using [the False Claims Act] more and more in the health care industry to protect Medicare and make sure that the fund isn’t being raided by unscrupulous doctors,” he said. “I hope what it serves is a lesson to the entire medical community in the area that we are watching.”