“Can Medical Justice solve my problem?” Click here to review recent consultations…
all. Here’s a sample of typical recent consultation discussions…- Former employee stole patient list. Now a competitor…
- Patient suing doctor in small claims court…
- Just received board complaint…
- Allegations of sexual harassment by employee…
- Patient filed police complaint doctor inappropriately touched her…
- DEA showed up to my office…
- Patient “extorting” me. “Pay me or I’ll slam you online.”
- My carrier wants me to settle. My case is fully defensible…
- My patient is demanding an unwarranted refund…
- How do I safely terminate doctor-patient relationship?
- How to avoid reporting to Data Bank…
- I want my day in court. But don’t want to risk my nest egg…
- Hospital wants to fire me…
- Sham peer review inappropriately limiting privileges…
- Can I safely use stem cells in my practice?
- Patient’s results are not what was expected…
- Just received request for medical records from an attorney…
- Just received notice of intent to sue…
- Just received summons for meritless case…
- Safely responding to negative online reviews…
On July 5, 2017, Dr. Mayura Kanekar was indicted by a grand jury in New York for federal healthcare fraud.
Kanekar was charged with conspiracy to commit health care fraud in violation of 18 U.S.C. § 1349, and conspiracy to defraud by obstructing the lawful function of the Internal Revenue Service in violation of 18 U.S.C. § 371. On June 20, 2018, a grand jury returned a superseding indictment charging Kanekar with the following additional charges: conspiracy to pay healthcare kickbacks, in violation of 18 U.S.C. § 371; money laundering conspiracy in violation of 18 U.S.C. § 1956(h); subscribing to a false and fraudulent tax return in violation of 26 U.S.C. § 7206(1), and two counts of submitting false claims in violation of 18 U.S.C. § 287.
On June 13, 2022, after two weeks in trial, a jury found Kanekar not guilty. And her two co-defendants were also found not guilty. A positive outcome for her.
Kanekar filed a motion pursuant to the Hyde Amendment (more on that shortly) to be reimbursed for attorneys’ fees and other litigation expenses.
How much? $845,750.
On June 29, 2023, a judge denied Dr. Kanekar’s request. Freedom will have to be good enough.
What did the prosecution allege:
First, the “kickback scheme,” in which Kanekar purportedly paid the managers of the clinic in which Kanekar maintained an occupational therapy practice, in order to provide patients to Kanekar in exchange for payments; and second, the “false claims scheme,” in which Kanekar allegedly submitted fraudulent claims to Medicare using her unique national provider identifier number during periods when she was out of the country. The evidence introduced by the prosecution showed that from April 2010 through June 2016, Kanekar, through two companies owned by her, billed nearly $35 million to Medicare, and received $15 million from Medicare in return.
That was no trivial allegation.
In 1997, Congress passed the Hyde Amendment which allows district courts to award a prevailing criminal defendant, “a reasonable attorney’s fee and other litigation expenses, where the court finds that the position of the United States was vexatious, frivolous, or in bad faith, unless the court finds that special circumstances make such an award unjust.”
This is a tough climb.
“For the government’s position to be ‘vexatious, frivolous, or in bad faith,’ the prosecution must have been brought (a) to hector or intimidate the defendant on shaky factual or legal grounds (vexatious); (b) without even a reasonably arguable factual and legal basis (frivolous); or (c) with an element of intentional deceit or dishonesty (in bad faith).” Id. at 608-09; see also id. at 609 n.12 (summarizing the legislative history of the Hyde Amendment as discussed at length in United States v. Gilbert, 198 F.3d 1293 (11th Cir. 1999)).
“Vexatious” means: “[w]ithout reasonable or probable cause or excuse.” A “frivolous” pleading is one that is “clearly insufficient on its face,” a “frivolous” claim as one for which its proponent “can present no rational argument based upon the evidence or law in support of that claim,” and “bad faith” is “not simply bad judgment or negligence, but rather the conscious doing of a wrong because of dishonest purpose of moral obliquity.”
As the court noted:
Thus, the standard for awarding attorneys’ fees under the Hyde Amendment is “intentionally demanding.” Bove, 888 F.3d at 609 n.12; accord United States v. Reyes-Romero, 959 F.3d 80, 92 (3d Cir. 2020) (“[A] criminal defendant seeking costs and fees under the Hyde Amendment faces a ‘daunting obstacle.’”) (quoting United States v. Isaiah, 434 F.3d 513, 519 (6th Cir. 2006)); United States v. Manchester Farming P’ship, 315 F.3d 1176, 1184 (9th Cir. 2003) (remarking that the policy reason for the Hyde Amendment is “to protect defendants from outlandish Government prosecutorial misconduct” (emphasis added)). “An acquittal, without more, will not lead to a successful Hyde Amendment claim, as it was Congress’s intent to ‘limit Hyde Amendment awards to cases of affirmative prosecutorial misconduct rather than simply any prosecution which failed.’” Schneider, 395 F.3d at 88 (quoting United States v. Knott, 256 F.3d 20, 29 (1st Cir. 2001)). Nor is a 6 motion for attorneys’ fees under the Hyde Amendment “an exercise in 20/20 hindsight,” as “[t]he trial process is fluid and involves multiple strategic and evidentiary decisions, many of which cannot be predicted at the outset, and many of which depend on contested evidentiary and other trial rulings—not to mention the uncertainties associated with witnesses’ testimony.” Schneider, 395 F.3d at 87-88 (quoting United States v. Sherburne, 249 F.3d 1121, 1127 (9th Cir. 2001)). Therefore, “trivial instances of offending conduct” do not suffice to justify an award of fees under the Hyde Amendment; rather, the vexatious, frivolous, or bad faith conduct must be “substantial or significant.” Schneider, 395 F.3d at 90.
The judge ruled against Kanekar’s claim for lawyers’ fees. The judge noted that the prosecution’s claims were not vexatious, frivolous, or in bad faith.
The indictment charging Kanekar and her codefendants was just one part of a wide-ranging and sophisticated criminal scheme occurring over the course of years involving over a dozen defendants defrauding government healthcare programs of tens of millions of dollars.
The judge distilled Kanekar’s claims as follows:
In my assessment of the evidence presented at Kanekar’s trial, insofar as there may have been some weakness in the prosecution’s case, it amounted simply to its failure to convince the jury beyond a reasonable doubt that the defendants, including Kanekar, knew either that the employees or other agents they paid to manage their clinics were paying patients to come to those clinics for health services, or that it was illegal to pay the managers to refer them patients (even if the managers did not pay the patients).
In other words, the judge was not persuaded.
In effect, then, Kanekar’s motion is premised on the faulty conclusion that the government should have (or did) know Kanekar’s state of mind. Indeed, had the defendants waived their right to a jury and elected to proceed with a bench trial before me in this case, I would have found them guilty in light of the evidence establishing their knowing involvement in the underlying fraudulent schemes.
The judge seemed to believe that Kanekar should have kissed the ground because the jury allowed her to walk free. That would have to suffice. The fees paid to her lawyers apparently was her price for freedom. The Hyde Amendment would be of no help.
One of Kanekar’s arguments was that her billing company was the bad actor. And she was innocent.
The judge’s response:
To the extent that Kanekar had authorized Brunswick Billing to submit claims on her behalf, Kanekar was nevertheless obliged to submit accurate bills. Indeed, Kanekar understood that electronic billing using her personal and unique national provider identification number reflected her “legal electronic signature[,] and constitute[d] an assurance by the provider that the services were performed as billed,” and that Kanekar was “responsible for all Medicare claims submitted.” GX 1401. And the trial evidence demonstrated that the claims at issue were submitted under Kanekar’s national provider identical number during periods when Kanekar was traveling out of the country.
Three take home points:
If you have a bad billing company, odds are high you will be one of multiple defendants. Burying your head in the ground with willful blindness is not a great defense. Here, Kanekar got lucky.
Next, the Hyde Amendment was put in place as a remedy for prosecutorial misconduct. Prosecutorial misconduct, as articulated in the Hyde Amendment, is not common. The threshold for proving such misconduct is high. Here, Kanekar was unable to meet that threshold. Most criminal defendants exonerated at trial will likewise be unable to meet that threshold.
Finally, criminal defense lawyers are not inexpensive. But when your freedom is on the line, that is not the time to go cheap.
What do you think?
Medical Justice provides consultations to doctors facing medico-legal obstacles. We have solutions for doctor-patient conflicts, unwarranted demands for refunds, online defamation (patient review mischief), meritless litigation, and a gazillion other issues. If you are navigating a medico-legal obstacle, visit our booking page to schedule a consultation – or use the tool shared below.
“Can Medical Justice solve my problem?” Click here to review recent consultations…
all. Here’s a sample of typical recent consultation discussions…- Former employee stole patient list. Now a competitor…
- Patient suing doctor in small claims court…
- Just received board complaint…
- Allegations of sexual harassment by employee…
- Patient filed police complaint doctor inappropriately touched her…
- DEA showed up to my office…
- Patient “extorting” me. “Pay me or I’ll slam you online.”
- My carrier wants me to settle. My case is fully defensible…
- My patient is demanding an unwarranted refund…
- How do I safely terminate doctor-patient relationship?
- How to avoid reporting to Data Bank…
- I want my day in court. But don’t want to risk my nest egg…
- Hospital wants to fire me…
- Sham peer review inappropriately limiting privileges…
- Can I safely use stem cells in my practice?
- Patient’s results are not what was expected…
- Just received request for medical records from an attorney…
- Just received notice of intent to sue…
- Just received summons for meritless case…
- Safely responding to negative online reviews…
Ever since Representative Pete Stark (Dem-CA) created Class-1 felonies out of business agreements to recompense for patient referrals, these kind of “arrangements” have somehow persisted. It seems inconceivable that physicians and the billing companies they hire remain “unaware” of the dangers of these practices.
Yet, somehow, they persist. Considering that some of these referrals occurred when the doctor was not in the office, the verdict was remarkable. These must be some of the best and brightest criminal defense attorneys in the business.
It would seem that the doctor can “somehow” afford to pay their fees, even though the (unimpressed) judge disallowed them as part of the verdict.
There is such a thing as “falling into an overflowing creek and not getting wet.”
This happened to this defendant. I am reminded that if a DPM changes the angle of a nail-splitter by 3 degrees (and charges for it) in a nursing home visit, that too is a felony.
Strange scales of justice, indeed,
Michael M. Rosenblatt, DPM
This parallels the Park doctrine: the head of a company (CEO, president, whatever) is assumed to know everything that goes on in the company. This is even one step removed from it: Kanekar hires a billing company and is presumed to understand billing.
OK. Want to play that way? Good. Next time the judge brings his car in for routine maintenance, he drives out and the brakes fail. He hits someone. They sue him. He has the same relationship with the car company as Kanekar had with her billing company. According to the judge, he’d be on the hook.
Did Kanekar’s lawyers bother to make that point? Did it even occur to them?
This case seems to hinge on the amount of money billed over a period of time. Thus it triggered a computer alarm regarding the volume of payments. Were they accurate? No one knows from this presentation. Without knowing if the claims were false, how can one judge anything else about the case. Often physicians run afoul of computerized audits of their reimbursement and charges. If that happens, more than likely the physician will be investigated by an investigator that has no medical background. That investigator will proceed from the premise that the physician must be guilty and thus the investigator must do all that he can to assure that the physician is prosecuted. This will happen even if the prosecutor things it is a weak case. Grand juries see the amount in question and automatically think the physician is guilty. But when viewed from the context of x number of dollars over x number of years, seeing xx number of patients each day, the amount in question may not be as large as one assumes. The amount reimbursed was an average of $2.5M per year. Some physicians do generate that much revenue. But was that actually income to the physician? We do not know. We do not know how much of the physician’s revenue went to office overhead. IF we assume the normal 60%, then $1.5M went to office overhead and $1M went to the physician. But what we do not know is in this occupational therapy practice if other services by mid level practitioners were billed under this physicians number, or if other services were billed that were not directly done by this physician during this time. So her income could have been less than $1M. None of this ever gets explained to a jury that just doesn’t understand.
A physician in a neighboring town, in practice for 30 years as a family physician was indicted and tried for prescribing pain medication etc, for what the investigator thought was inappropriate prescribing and billing. The trial results were such that the physician was acquitted. Does this mean the government will avoid chasing him in the future. Once in the cross hairs always in the cross hairs.
As far as the reimbursement of the physician’s legal fees, it would seem that because of the way that the law was constructed, it was just there to dangle in front of people. The drafters of the law knew that it was rare that a reimbursement was going to be paid. As such physicians continue to have to pay out of their pockets for defense, while the government takes money out of their other pocket in the form of taxes. Criminal defense is expensive, and those fees are paid up front in criminal cases. They are not take on contingency.
Physicians need some relief from frivolous cases, and untoward, inappropriate prosecution by the government in these criminal cases that should be handled civilly. What is not discussed is what is the life shortening stress like for the physician and their family? Do they ever recover, physically or emotionally, or financially? Would any of us want to practice in an environment where there is a red target painted one’s back.
As far as the billing company is concerned, we all sign our tax returns that are prepared by our CPAs. Do any of us understand the dozens upon dozens of pages of a tax return? We don’t, but we sign on the dotted line. Same in this instance. The physician did not know about billing and hired an outside firm to do the billing for her. The only way that she would know that they were billing correctly is to hire an outside firm to do a forensic audit of the medicare claim filings. While that may be ideal, the cost could run into the thousands for a small scale review. Most physicians would not know to do that unless, their accountant, attorney, or a legal proceeding, forces them to.
While this article focuses on just the reimbursement of attorney’s fees, it is unfair to do that without examining all of the underpinnings for how the case came to be in the first place.
Am I missing something here? Why is the billing company becoming the bad guy? If I submit five thousand claims with my billing company, of which I know at least five hundred are false, the billing company is to process each claim as submitted. They do not investigate each claim submitted, they just do their job and prepare the bills to be sent to the patients. The medical providers in this case should have been found guilty, not the billing company. Was there anybody on that jury who graduated from the sixth grade?
When a doctor or other provider signs a medicare claim, he is potentially violating 19 laws. To me, that seems to be a lot of potential liability. True, the Federal Government mostly uses the False Claims Act, as the penalty is, if I recall correctly, about $22,000 per claim. If I am wrong, I hope that Jeff corrects me.
The doctor does have an obligation to review the claims submitted under his signature. Remember when we had paper 1500 forms? It was written there right above where we signed.
How much liability does billing company have? How common is it that they get into trouble? Rarely. NY State has a statute that billing companies can not bill under a percentage bases, but rather with a contract for a fixed fee. NY gets it right. Fixed fee billing takes away any incentive for the billing company to be creative in the billing. But, if the doctor or provider provides the superbill to the billing company, then, tell me why the billing company could be at fault? However, a normal billing company would question these requests, and if they have two synapses, would resign.
Seems to me if a physician or other provider gets referrals from another and there is not a fixed rental fee which is usual and customary, there could be some incentive to cross the line. The healthcare business is highly regulated and watched and one has to be stupid to think that he “will get away” with questionable activities.
As for demanding the government to reimburse legal fees, it is just additional arrogance.
Many large group practices and even University medical schools develop and staff various satellite clinics. The purpose of these clinics is to DIRECT patients in a certain direction. That direction can vary, but the expected direction is to the “mother” institution.
Because the “mother” institution pays for the maintenance and employees of the other clinics, it is “ possible” to look at that as a kickback for directing patients.
Yet, Government never goes after them. Either such institutions have certain political powers that individuals don’t have, or somehow Government considers this a “safe harbor” from prosecution.
It is probably a mixture of both. VA satellite clinics serve a similar function. But it is perfectly legal for Government to shunt patients into one direction. Ok, I admit that Government pays for Veterans’ care. But mostly Government is paying for private doctor care too.
The bottom line is that Pete Stark was mainly interested in controlling private, private individual businesses and doctors.
He correctly identified them as not having a power base willing to fight against him.
Michael M. Rosenblatt, DPM