Federal agents are investigating a Spokane doctors’ clinic suspected of intentionally overbilling Medicare and Medicaid for years.
The fraud probe at Northwest Nephrology Associates is extremely secretive, but has been going on for at least five months.
Sources indicate investigators believe the questioned billings could easily exceed $1 million.
A U.S. Justice Department civil lawsuit against the kidney-care clinic and its four doctors is sealed in U.S. District Court while the investigation continues.
The doctors and federal investigators refused to discuss the case. But Linda Hall, an aide to the inspector general of the U.S. Department of Health and Human Services, confirmed a fraud team is at work in Spokane.
“We are investigating” the clinic, she said. “But since it’s an open investigation we can’t discuss it at all.”
P.J. Grabicki, an attorney for the kidney clinic, said he was unaware of any fraud probe.
“I have no knowledge of a fraud investigation going on,” he said. Grabicki called the ongoing examination of billing records a “routine” audit.
“It is our position that there has been no intentional misbilling to anybody,” he said.
Grabicki also said he was unaware of the lawsuit filed against the clinic by a private citizen and the federal government.
Frank Wilson, an assistant U.S. attorney, refused to comment on the inquiry or the lawsuit.
Sources say federal investigators have examined thousands of patient billing records.
The office of the Health and Human Services inspector general recently asked Sacred Heart Medical Center for thousands of documents pertaining to services provided by the independent kidney clinic in the Sacred Heart Doctors Building, said Marilyn Thordarson, hospital spokeswoman.
Thordarson said the government’s request was so large and potentially expensive to deliver that the hospital and federal investigators agreed to postpone the transaction, at least for now. She said just copying the requested documents could cost $50,000.
The fraud investigation apparently is based on the False Claims Act, often used to sue companies suspected of overcharging the government for their medical or military contractor services.
Northwest Nephrology Associates is one of two Spokane clinics that specialize in dialysis and other kidney services.
The clinic’s doctors are Mark Frazier, Leo Obermiller Jr., Mary Anne McDonald and Katherine Tuttle. Gary Cline, a physician’s assistant, also works there.
“These are fine, upstanding people,” said Grabicki.
Allegations against the clinic include the claim that doctors billed Medicare for multiple visits when only one visit was actually made or medically necessary, sources say.
Nephrologist Richard Steury said investigators contacted him in November. Steury was a doctor at the Northwest Nephrology Associates before he retired about three years ago.
Steury said he was shocked when an investigator indicated the clinic was the target of a fraud audit. He described the clinic’s physicians as “very hard-working, dedicated doctors. I couldn’t believe they would be out to fleece the government.”
Steury is not a target of the probe, sources say.
Steury said the federal audit may simply reflect the clinic’s troubles with the increasingly complex bookkeeping Medicare requires.
“I got to admit that the last few years I was there I didn’t spend a lot of time poring over those” Medicare forms, he said. “I think it gets like income tax. You don’t want to pay more than you should, but you don’t want to cheat either.”
Grabicki said his clients and other health clinics deal with such a large volume of patients and visits that “human error, inadvertent error could happen all the time.”
Sources familiar with the investigation said there is no way the fraud allegations can be dismissed as sloppy accounting.
While the investigation has been secretive, word of its magnitude has spread in Northwest medical circles.
William Bennett, a nephrologist and instructor at the University of Oregon, said he is aware of the inquiry.
“Just vaguely,” said Bennett, a former national board member for a national nephrology association. “I try not to know too much about it.”
Sources say the state of Washington’s Medicaid Fraud Control Unit also is involved in the probe, but the unit’s director would not confirm or deny that.
Medicaid and Medicare are taxpayer-financed health insurance programs for the poor and the elderly. Medicare, like Social Security, is available to anyone 65 years or older. Medicaid is available only to the poor.
Medicare is federally funded. Half of the state’s Medicaid program is financed with federal cash.