Seeing Red

After years of taking it on the chin, Bob Goeggel struck back at his competitor. Thanks to his accusations of fraud, the state's largest ambulance company is on the operating table and the feds are doing the cutting.

The question of how the two civil lawsuits — filed by Goeggel and by the government — will proceed is an issue before Judge Hamilton.

Because Dowd's office didn't name Barnes-Jewish and SLU in its civil complaint, it has taken the position that Goeggel can pursue his claims against them separately. However, prosecutors say Goeggel can't assert any separate claims against Abbott and Dougherty.

Barnes-Jewish and SLU, for their part, contend that they didn't participate in any of the fraud allegedly committed by Abbott, so Goeggel doesn't have a case against them. Goeggel's attorneys argue they and the government are pursuing different types of fraud.

"Mr. Salvati stated that the hospitals and Abbott knew that billing Medicare for this transportation was against the law, discussed that it was against the law, and 'did not ... care.'" - from Bob Goeggel's lawsuit
"Mr. Salvati stated that the hospitals and Abbott knew that billing Medicare for this transportation was against the law, discussed that it was against the law, and 'did not ... care.'" - from Bob Goeggel's lawsuit

In the larger scheme of things, Medicare fraud by ambulance companies is a pittance. The Medicare program paid $210 billion in benefits during the last federal fiscal year, which ended Sept. 30, 1998. Of that amount, about $176.1 billion was paid on fee-for-service claims; the rest, about $33 billion, was paid to managed-care companies.

On the basis of a statistical sampling, looking at about 600 beneficiaries with 5,540 claims, the inspector general estimates about $12.6 billion was paid improperly — or about 7.1 percent of the total fee-for-service payments. How much of those payments were fraudulent, the feds can't say, acknowledging that in many cases, the billing and coding errors may have been inadvertent. Most Medicare dollars flow to hospitals, physicians and home-health agencies and — no surprise here — that's where most of the billing errors were found.

Improper payments to ambulance companies and other transportation providers made up a tiny fraction of the total overpayments, a mere 0.69 percent of the total overpayments, or about $86 million. Medicare payments for transportation services totaled about $1.65 billion in fiscal year '98.

"In the scheme of things, is it considered to be one of the most vulnerable benefits of the program? We've not identified it as such," says Ben St. John, a spokesman for the inspector general. "Home-health agencies, durable medical equipment, hospice — some of the other areas where much, much more money is spent have been identified as vulnerable benefits in the programs."

According to examples of fraud alleged in the government's lawsuit against Abbott, the average false claim cost Medicare about $152. The government doesn't say how many false claims Abbott may have submitted or how much money Abbott may have collected.

Sprung, however, estimates the total exceeds $5 million from 1992-98, up until the time subpoenas were executed. With treble damages, and thousands of claims at $5,000-$10,000 a pop, the case could theoretically yield penalties topping $100 million, though no one expects any settlement to reach that level.

Indeed, one of the largest Medicare cases brought against an ambulance company resulted in a settlement that was substantially smaller.

New York City agreed last fall to pay $9.5 million to settle charges that it had billed Medicare for ambulance services for patients who didn't need them, then mischaracterized the patient's condition to collect the reimbursement. No criminal charges were filed, the city admitted no wrongdoing and the whistle-blower, a former city paramedic, collected $1.425 million.

Others haven't fared as well, because the government tends to prosecute smaller companies more aggressively. Last year, Michael Schooler, president of Georgia Intensive Care, received a one-year prison sentence for submitting false claims; Harley Revis, accused of submitting more than $1 million in false claims on behalf of his Oklahoma ambulance company, got 51 months.

More than 100 ambulance companies have been nailed in the past five years for Medicare fraud.

Amid the clampdown, all providers are feeling the pressure — ironically, even Bob Goeggel; his Medicare carrier is putting his claims under a microscope and has denied a bunch. "We met all the criteria, but they're apparently under great pressure to produce these reports (to the government) and do them quickly," he says. "One of the quickest ways to do that is to deny a lot of stuff."

Gateway is resubmitting the claims and expects to be paid, but for a small company, where cash flow is critical for meeting payrolls and paying vendors, the delay has been an "inconvenience of major proportions," Goeggel says.

He blames companies that defrauded the government for making it hard on honest businesses.

Since his retirement from his $225,000-a-year job at Abbott, Dougherty, who turned 60 last week, has launched a consulting-and-management-coaching business. According to his still-under-construction Web site, T.W. Dougherty Associates "specializes in personalized management and consulting and coaching for mid-sized businesses in the greater St. Louis, Missouri region." It doesn't say whether he has any clients.

McCormick says Abbott has become a stronger organization in the past year, working hard to develop "the strongest Medicare-compliance program that we know of for an ambulance service in the Midwest.... I have no idea how it'll all wind up, but I know this: I'm proud to come to work every day at Abbott."

Goeggel, for his part, is confident that federal prosecutors will push forward, expand their investigation and prevail. What that would mean for Gateway's future, however, is unclear.

Whatever the outcome of his whistle-blower suit, Goeggel says he has no regrets. "There were activities going on that were illegal," he says. "I didn't do this for competitive advantage. I did it because there was illegal activity going on and I was aware of it.

"Competition is part of business — matter of fact, it makes business very, very healthy. But you know what's not part of business? Fraud. That's not part of business."

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