Suit Claims Doctors Overbilled Medicare Feds Unseal Case Against Nephrology Associates

A group of Spokane kidney doctors routinely overbilled the federal government and ignored the poor medical judgment of a founding partner, according to a civil lawsuit unsealed by the federal government Friday.

The lawsuit accusing the doctors at Northwest Nephrology Associates of Medicare fraud had been sealed since a whistleblower filed it under the False Claims Act in July 1995. The government intervened in the lawsuit Jan. 14.

That essentially means the government is taking over the case, although Dr. Stephen Fox, who filed the lawsuit, will share in any money recovered.

Fox, the whistleblower who worked for Northwest Nephrology for more than a year, talked publicly for the first time Wednesday about the fraud allegations and allegedly poor medical care given by Dr. Mark Frazier.

“It became clear to me over time that the group was willing to ignore Dr. Frazier’s mistreatment of patients in order to preserve their high incomes that were in part generated by their fraudulent inpatient dialysis billings,” said Fox, who now works in Colorado.

The group is accused of billing the federal government for a higher level of inpatient care than patients needed for two major types of dialysis. The lawsuit claims the doctors submitted thousands of false claims to Medicare, Medicaid and private insurers.

The lawsuit also says the government was defrauded of more than $1.5 million.

A whistleblower lawsuit filed under the False Claims Act is sealed until the government decides whether to intervene. If the government does intervene, it lends more weight and resources to the civil lawsuit.

Criminal charges also are being pursued against the doctors group, but it’s not clear whether all - or any - of the doctors will be charged.

Northwest Nephrology has splintered since the fraud allegations first were made.

Frazier, the doctor who helped start the group back in 1984, now is living near his family in Omaha, Neb. After facing criminal charges and a threat to his medical license, he’ll most likely never practice medicine again in Spokane.

Dr. Mary Anne McDonald and Dr. Leo Obermiller now run Nephrology Consultants in Spokane.

Dr. Katherine Tuttle now works as the director of research at The Heart Institute.

All are named in the lawsuit, along with former business manager John Taylor. But the federal government plans to file an amended lawsuit in the near future that may show that some doctors are more culpable than others.

The Spokane doctors referred questions to their lawyers.

Carl Hueber, who represents Tuttle, said the government’s investigation will show that Tuttle did nothing wrong.

“Dr. Tuttle joined Northwest Nephrology in 1991 from an academic background,” Hueber said. “The firm’s billing practices were in place when she arrived, and she followed those established procedures until the fall of 1995 when she was contacted by the Medicare investigators. She’s cooperated completely with the government since that first contact.”

At least one lawyer wasn’t aware that the lawsuit had been unsealed.

“I feel like the fellow in the Federal Express commercial - Why am I always the last to know?” said Irwin Schwartz, the lawyer representing Frazier in the Medicare investigation. Schwartz said he couldn’t comment on a lawsuit that he hasn’t seen.

“I do not wish to comment on the specifics of the recently unsealed complaint,” said Larry Finegold, the lawyer who represents Obermiller. “We do take issue with many of the allegations made by Dr. Fox.”

McDonald’s lawyer was out of town. But Finegold said Obermiller and McDonald have been working with the government for the past several months to resolve the disputed billing practices.

The accusations against Northwest Nephrology involve patients who received dialysis in the inpatient ward at Sacred Heart Medical Center.

Fox joined the group in September 1992 after working as a Navy doctor for nine years. He said he had no experience with billing third parties such as Medicare or private insurance companies before joining Northwest Nephrology.

Fox said Frazier told him to mark two progress notes on the chart for any patient receiving inpatient dialysis because it was a government requirement.

But an inpatient visit billed with two notes pays a doctor significantly more than an inpatient visit billed with one note. National kidney doctor associations and the federal government say a second note should only be marked if the patient has complications during dialysis.

As Fox worked with the group in 1993, he said he worried about Frazier’s medical care. Fox said Frazier ordered an inappropriate surgery for a patient who didn’t need it.

“I confronted Dr. Frazier in October of that year for what I suspected to be poor medical care,” Fox said. “He indicated he was an impaired physician. His words, not mine.”

Late last month, Frazier pleaded guilty to interfering with Sacred Heart Medical Center in exchange for prosecutors dropping a more serious harassment charge.

The state medical board also may yank Frazier’s medical license over allegations of poor care and erratic behavior, such as training a laser-sighted gun on joggers when they ran by his home.

Fox said he was terminated at the group in January 1994, after complaining about Frazier. He said he was relieved by the termination, and he then started working for the other kidney doctors group in Spokane at Rockwood Clinic.

That’s when Fox said he learned that he wasn’t supposed to make routine double notes for inpatient dialysis. Fox said he started investigating the billing further.

In a single five month-period in 1993, the group billed the higher rate for hemodialysis 97 percent of the time, Fox said. Hemodialysis is one of the more common types of dialysis.

That compares to a national rate of about 20 percent of the time.

, DataTimes