CA Doctor Sentenced in Medicare Fraud Scheme Involving Upcoding

A California doctor has been sentenced to prison for nearly eight years after his involvement in a $12 million Medicare fraud scheme in which he upcoded and billed Medicare for unnecessary procedures.

Donald Woo Lee, 55, of Temecula, was found guilty of seven counts of healthcare fraud and one count of adulteration of a medical device.

Lee recruited Medicare beneficiaries to his clinics, falsely diagnosed them, and provided them with medically unnecessary procedures, according to court documents.

Specifically, in or around September 2012, Lee began fraudulently informing Medicare patients that they needed vein ablation procedures when they had no visible signs of varicose veins, no adverse symptoms, no ultrasound images of diagnostic venous insufficiency, and no other medical need for the procedure.

Medicare reimburses providers for vein ablation procedures only in certain circumstances, where proof of symptoms and initial conservative treatment are required.

Lee performed vein ablation procedures on patients who did not display the required symptoms and without ordering conservative treatment first.

Lee then billed Medicare for the unnecessary procedures using incorrect billing codes to receive higher reimbursement—known as upcoding. Claims data showed that between August 2012 and August 2015, Lee billed Medicare over $12 million for vein ablation procedures and received $4.5 million in reimbursement from the public payer.

In addition, Lee repackaged used contaminated vein ablation catheters to reuse on patients while knowing the catheters were cleared by the Food and Drug Administration (FDA) for single use only.

Lee also pleaded guilty in March 2020 to one count of submitting false declarations in a bankruptcy proceeding, the press release noted.

Lee was sentenced to serve three years of supervised release and ordered to repay Medicare $4.5 million, in addition to the 93-month imprisonment.

The Federal Bureau of Investigation (FBI), the HHS Office of Inspector General (OIG), and the FDA Office of Criminal Investigations (OCI) investigated the case.

The illegal practice of upcoding can substantially increase spending for Medicare and commercial insurers. Between 2013 and 2018, commercial inpatient spending in Massachusetts increased by nearly 11 percent, mainly driven by higher hospital prices and upcoding.

In a February 2021 report, OIG found that hospitals were increasingly billing Medicare for inpatient stays at the highest severity level. A watchdog noted that these stays are vulnerable to upcoding. OIG recommended that CMS conduct targeted reviews of inpatient stays to prevent upcoding, focusing on stays that are particularly short or have only one major complication coded.

Recently, several health systems have reached settlements after allegedly billing Medicare and other federal health plans for unnecessary services.

For example, Providence Health & Services Washington reached a $22.7 million settlement to resolve fraud allegations that it falsely billed Medicare and Medicaid for medically unnecessary neurosurgery procedures.

Florida-based Physicians Partners of America also recently settled to resolve allegations that it violated the False Claims Act and billed Medicare for fraudulent medical testing and services.