Healthcare Fraud, ALCAT, and Section 655.5


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On January 20, 2015, Louisiana chiropractor David Lee Killen pled guilty to one count of healthcare fraud for billing insurance companies for chiropractic care, equipment, and testing he never performed. Killen, owner of Back on Track Clinic in Bogalusa, LA, admitted to using the identification numbers of physicians who no longer worked for his clinics to submit bills to insurers for work they did not perform.

Killen also urged patients to submit to expensive, often unneeded allergy tests, including the antigen leukocyte cellular antibody test, known as “ALCAT.” Killen either did not perform the ALCATs or offered a reduction or voiding of co-payments if patients agreed to the test. Killen earned a significant profit off these tests, as the difference between the amount Killen billed insurers for the tests and the cost he paid to outside clinical laboratories for the results was substantial.

Killen, who had been a licensed chiropractor since 2006, overcharged insurance companies and Medicare and Medicaid a total of $285,000, which yielded him collections of $183,000. He had faced 30 counts of healthcare fraud and four counts of identity theft before he accepted a plea deal that includes a maximum of 10 years in prison, a $250,000 fine, and three years of probation.

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Were he in California, Killen’s behavior could have constituted a violation of Business & Professions Code Section 655.5 because he fraudulently billed insurers for ALCAT tests he did not perform. In order to avoid such a penalty, a further examination of Section 655.5 is required.

Section 655.5(a) states that it is against the law for a healthcare provider or any other healthcare facility to solicit payment from a patient for any service he, she, or it does not carry out or supervise unless the patient or customer is beforehand given the “name, address, and charges of the clinical laboratory performing the service.” Violators commonly fail to disclose that they purchased the test and falsely indicate that they actually performed the test by identifying him or herself as the provider.

In order to avoid a Section 655.5 violation, the bill must provide the contact information and charges of the clinical laboratory performing the service and “clearly show whether or not the charge is included in the total of the account, bill, or charge.” According to Section 655.5(g), a healthcare provider is prohibited from charging more than he or she was charged by the clinical laboratory for their service unless the additional charge is for a service actually rendered by the healthcare provider to the patient. Such a violation is “punishable upon a first conviction by imprisonment in a county jail for not more than one year… or by a fine not exceeding $10,000, or by both that imprisonment and fine.”

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While Section 655.5 does not prohibit the billing of all services associated with a purchased laboratory test, healthcare providers must be careful about billing for services associated with purchased tests because any errors can be considered a violation of Section 655.5. If you have any questions regarding this law and how it may relate to your practice, or any other legal inquiries, please contact the attorneys at Carlson & Jayakumar at (949) 222-2008.

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