It was just over a year ago when the U.S. Department of Justice (DOJ) in the Western District of Pennsylvania announced indictments against Hertel & Brown, an outpatient physical therapy provider, including the owners, and eighteen (18) employees for committing healthcare and wire fraud. This included Hertel and Brown’s billing specialist.

The Federal Bureau of Investigation (FBI) showed up at Hertel and Brown Physical & Aquatic Therapy with search warrants and in black SUVs. The FBI seized operational, billing, and clinical records, including WebPT records. Additional evidence was unsealed from Yahoo and Gmail accounts as well as Hertel & Brown internal resources. This case caught the eye of many compliance and healthcare law attorneys who have been waiting to see how it will shake out, as it will most likely be set a precedent.

The indictment announcement was unique and startling, , as the treating staff were also indicted as participating in the conspiracy to commit healthcare fraud. All defendants were charged with the same felony culpability as the business and owners, regardless of employment position. The staff, thus far, are also being tried simultaneously with Hertel & Brown as co-defendants – with many staff requesting separate trials, which have been denied.

As a refresher, here are some of the findings cited in the US DOJ announcement with the full release being found here:

  • Hertel & Brown Physical & Aquatic Therapy utilized unlicensed technicians to provide physical therapy treatment, including aquatic therapy, and billed that treatment as if performed by a licensed physical therapist or physical therapy assistant.
  • Unlicensed technicians at Hertel & Brown Physical & Aquatic Therapy were permitted and required to log into the treatment documentation system, WebPT, as a licensed physical therapist to facilitate documenting treatment as if performed by a licensed therapist.
  • Hertel & Brown Physical & Aquatic Therapy and its licensed employees regularly recorded and billed for treatment time in excess of actual treatment time spent with patients.
  • Hertel & Brown Physical & Aquatic Therapy and its licensed employees rarely if ever utilized group therapy codes when billing for treatment even when group billing codes were the only appropriate billing codes that could have been utilized.
  • Hertel & Brown Physical & Aquatic Therapy regularly billed treatment time using the name and credentials of a physical therapist who was on vacation and not working on the day in question.
  • Hertel & Brown Physical & Aquatic Therapy allowed physical therapy assistants and unlicensed personnel to treat patients with insurance that only reimbursed for treatment performed by a physical therapist. Then the practice and its employees covered up who actually treated the patient by removing the name of the actual person providing treatment from the treatment record.
  • Hertel & Brown Physical & Aquatic Therapy and some of its employees also manually changed the patient schedule after the fact to conceal that Medicare patients were scheduled at the same time as other patients. This was done to conceal that Medicare patients did not have one on one treatment with a physical therapist as billed by the practice and required by Medicare.

Fast forward one year. The case has been moving along slowly with numerous extensions being granted until November 2022, when the judge announced no more extensions would be permitted. The judge has set the pretrial motion date of February 13, 2023. So, what has occurred since the announcement?

  • Hertel & Brown now only operates at one location with limited staff.
  • Licensed staff are challenged in finding gainful physical therapy employment and many payers have not been paying for physical therapy services provided by individuals listed on the original indictments.
  • Several staffers are negotiating plea deals and will most likely be required to testify at the jury trial.
  • Staff have been requesting separate trials which are being denied. For example in United States v. Johnson, Decided July 26, 2022, Judge Baxter concluded that “there is no serious risk that a joint trial would compromise a specific trial right of one of the Moving Defendants or prevent the jury from making a reliable judgment about their respective guilt or innocence.”
  • Several legal updates have been unsealed or released publicly which contain the following:
  1. Billing for service provided by unlicensed staff resulted in staff billing for services totaling more hours than available in the day (Impossible Day Scenarios)
  2. Applying licensed staff signatures to claims where licensed staff did not provide services (False Claims and Wire Fraud)
  3. Staff rarely utilized group billing codes when one-on-one therapy was not provided
  4. Interviewed staff have admitted to billing for treatments provided by others, including unlicensed personnel

This is a case to watch for any provider submitting claims to payers, as the outcome of the trial will set a precedent of individual culpability when healthcare fraud is occurring. As you follow the outcome, keep in mind that providers who submit claims to payers are expected to know the billing rules, follow the billing rules, and if uncertainty exists, speak up and bring your concerns to the Compliance Officer. In this case, we wonder if a Compliance Officer existed and/or could have been helpful for staff included in the indictments? This case also brings to light ethical standards of practice as a physical therapy professional along with state licensing. State licensing boards contain specific language on ethical and regulatory practice, which is to be maintained by the licensee to be state licensed.

What are the key takeaways?

  • Having a designated Compliance Officer and compliance program is the first step to minimizing healthcare fraud and establishing compliance within an organization.
  • Having compliance-specific policies and procedures, educating staff on common laws impacting their practice, including conflicts of interest and a code of ethical practice. Non-compliance has licensure sanction ramifications and for many, that results in no longer practicing as a physical therapist or assistant.
  • Conducting new hire training on coding and billing is essential.
  • Understanding payer billing and coding rules once training has occurred. If questions arise, direct them to the compliance officer.

Here are additional resources to review: