By: Martin Merritt, esq.
Past President, Texas Health Lawyers Association
Past Chair, DBA Health Law Section
martin@martinmerritt.com
“Please Tell Me you Didn’t. . . How to Keep Clients Out of the Jailhouse, Poorhouse and Lawyers Out of the Nuthouse” -Blog
As you can tell, I love talking about health law & litigation issues, and general wellbeing, if you have any health law questions or better yet, need to refer a case, just call or drop me an email and I will happily talk.
If it is too good to be true, it probably isn’t.”
–anonymous folk saying
“Jesus Christ on a Bicycle,” is an old Irish phrase used to express exasperation. Honestly, after 40 years, I have begun to run out of colorful expressions in reaction to schemes my clients keep getting caught up in. (“Christ on a bike,” “Please tell me you didn’t . . .” and “Have we learned . . .nothing?,” are still my favorites).
But, there is perhaps no better day than Labor Day, to reflect on the wave of wound care litigation that has painted my year so colorfully thus far. Travelling from Dallas this year, I have rolled across amber waves of grain into patches of towns in Texas that can’t possibly still exist.
I have been on wound care cases down to turquoise beaches in Miami, which defy belief that water could possibly be that blue-green. I have had cases in bluegrass pastures in the Eastern District of Kentucky (that surprisingly aren’t blue at all). I have even “Forest Gumped” my way into cases in the Painted Deserts of Arizona and finally ended up in wound care arbitration in the oxidase-brown, half-rotten core of the “Big Apple,” New York City.
Why am I doing this? In a word, “crooks.” (They are at it again.)
“Miracle of birth adjacent” wound care. The story is always the same, my poor client is getting sued for millions of dollars from all sides in the wound care space. Some peddler of expensive “Gucci Band-Aids” has convinced my client that Medicare just loves paying $500,000 for a single-day’s application of placenta-based allograft skin substitute patches, that could have been bought elsewhere for hundreds of dollars each from legitimate sellers. (What could possibly go wrong?)
The first problem is, as always, that the people paying for the product (Medicare) aren’t in the room when the people receiving the treatment (the patients) agree that whatever the peddler of these products (the bad guys) told my client (the prescriber) about the curative power of their particular brand of Gucci Band-Aids (and Medicare’s willingness to pay for them), is a perfectly good reason to put $4.5 million in bandages on an 87 year old in hospice care.
Whether or not these things will cure grandma’s wounds is a matter of debate. If we all agree that childbirth is a miracle, then any “miracle-adjacent” tissue used to make these placenta-derived bandages should at least be worth a try to save grandma, right?
Answer: It depends. Some of these bandages, from honest sellers, cost a few hundred dollars each, which is perhaps worth a try on the grounds, “maybe-it-works/maybe-it-doesn’t”. (That is actually how the government thinks.) But, if Medicare gets a $500,000 bill for each graft on the off chance it might work (and $4.5 million bill for an entire course of treatment), there had better be FDA approval that these brands work better than a Band-Aid. (And there usually isn’t.)
And that’s the real problem. Unscrupulous sellers have figured out a way to game the system, charging millions for a single patient, when the same product could have been purchased for a fraction of the cost. Medical providers have been duped in to believing that Medicare had agreed to cover the cost, but are shocked to find they have been deceived. Often, after Medicare initially paid the claims, then clawed the payment back.
Sociopathy 101: If you want to understand healthcare fraud, read Nietzsche’s Beyond Good and Evil. Even legitimate Fortune 500 companies test sales force applicants for Cluster B narcissism and sociopathy, using clever descriptions like “predictive hiring assessment” (to beat around the bush as to what they are really up to)—they aren’t trying to “weed out” sociopaths (they want as many as they can get on their sales team.)
As Nietzsche wrote in Beyond Good and Evil, what we would call “evil” behavior, sociopaths would think of as “opportunity.” Sociopaths, according to Nietzsche, just see a more direct path to getting what they want, unconstrained by herd morality. Sociopaths don’t care if they are bothering prospective customers, they don’t care if what they are selling is bad for the customer, sociopaths only care about making a sale.
And a lot of these wound care marketers are comprised of unscrupulous sales people who quit jobs at larger (more regulatory compliant companies), to act as independent marketing reps for a percentage of Medicare sales reps (which is often a straight-up federal Anti-kickback statue violation).
Why do they do it? I think they figure the government “can’t catch everyone.” But stupidly, these companies run out of new victims and money. So, to attempt one final payday, they sue their customer (my clients) for millions of dollars in unpaid invoices, which my client can’t pay anyway, because the government didn’t pay my client, or if it did pay, has clawed the money back.
If there is any justice, it is that the lawsuit by the seller or distributor is often immediately followed by a federal Civil Investigative Demand by the DOJ, investigating the seller’s business practices. In short, the government knows who my client is (because their names are on the claim form.) But the government often doesn’t know who was in the chain of distribution, until the seller sues my client in open court, thus hoisting themselves on their own petard. (And the world makes sense again.)
Why did Medicare ever pay for these $500,000 grafts in the first place? If you will join hands with me as we make a leap of logic, applying Carl Jung’s popular heuristic maxim, “If you cannot understand someone’s actions, look at the consequences and infer the motive.”
I have had wound care clients who were paid by Medicare millions of dollars in one month, only to then have the MAC claw the money back the next month.
Short answer: Medicare paid “just to f**k with these people.” It is the same reason they place a fake rabbit on a mechanical arm at the dog track— to give the hounds something to chase.