Last month, the Eleventh Circuit upheld the conviction and 11-year prison sentence of a physician-Medical Director of two substance abuse treatment centers in Florida who was convicted by a jury of participating in a conspiracy to commit healthcare fraud.  On appeal, Arman Abovyan, a board-certified internal medicine physician, challenged his convictions based on insufficiency of evidence. In U.S. v. Abovyan, No. 19-10676 (11th Cir. Feb. 22, 2021), the court rejected Abovyan’s argument that the government’s failure to provide direct evidence of his participation in the scheme should have been fatal to their prosecution, holding that the government may rely upon circumstantial evidence or inferences from the defendant’s conduct to prove a defendant agreed to join a healthcare fraud conspiracy.

At trial, the defendant, Abovyan, argued that he was an “unwitting patsy” entangled in a healthcare fraud scheme orchestrated by Kenneth Chatman, the owner of two substance abuse treatment centers.  Chatman recruited Abovyan to be the medical director of two outpatient facilities named Reflections Treatment Center (“Reflections”) and Journey to Recovery (“Journey”), both of which provided substance abuse treatment, including ordering drug testing services and prescribing drug treatment medication.  In this role, Abovyan was paid $16,000 per month by Chatman.   The scheme at issue involved payment of kickbacks by lab owners to Reflections and Journey in exchange for sending urine and saliva samples to the labs for expensive confirmation drug testing that cost between $1,000 and $6,000 per test and caused total false billings of over $11 million (by comparison, uninsured “scholarship” patients at Reflections and Journey were prescribed one 12-panel point of care test per month at a cost of a few dollars).

The court pointed to evidence presented at trial of the defendant’s “full cooperation” with Chatman to advance the healthcare fraud scheme.  At trial, the government presented evidence that Abovyan, while serving as Medical Director of the two facilities, ordered and authorized excessive lab drug tests that were medically unnecessary. Abovyan wrote “standing orders” directing testing of all insured patients (including government healthcare program beneficiaries) at least 2-3 times a week, using pre-signed requisition forms that left the patient information and diagnoses sections blank, but pre-checking boxes for full comprehensive confirmation tests for over 100 substances (including drugs that are not addictive or that were not suspected of abuse in the patient’s history).  By contrast, uninsured patients were given one test per month costing “a few dollars.”  The pre-signed forms used for the insured patients were photocopied and filled in by staff members without physician involvement to avoid Abovyan having to “continually sign off on each individual form” and occasionally staff used their own urine or saliva for specimen tests when patients did not show up for appointments.  Additionally, evidence at trial pointed to Abovyan’s pattern of prescribing Suboxone to his patients despite the fact that he was not licensed with the DEA to do so.

Abovyan’s trial lasted eight days and the government presented over 20 witnesses and what the Circuit Court referred to as “overwhelming evidence” of the healthcare fraud scheme.  Several former patients of Abovyan testified at trial, indicating their very limited interactions with Abovyan and described his general lackadaisical practices without ever discussing the lab test results. The court noted that during an interview with the FBI, Abovyan described his attitude about patients’ drug use after they left daily treatment at his facilities as “whatever happens happens.”  In another interview, Abovyan said that working at the treatment facility was “easy money” but also “the biggest mistake of his life.”  In sum, the Eleventh Circuit ruled there was sufficient evidence that “[a]lthough ordering drug tests and prescribing buprenorphine, Abovyan did so without actually examining patients, making assessments or creating individualized treatment plans.”

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This case highlights how physicians involved in day-to-day operation of healthcare facilities can be held responsible for the results of their care and the imperative for prescribing physicians to make individualized assessments of medical need based on a reasonable examination.  The courts are unlikely to turn a blind eye to practitioners who allow bad actors to use their license for abusive billing practices and who neglect to properly oversee patient treatment, diagnoses and prescriptions.  Especially where you have egregious practices, such as those found here, like standing orders for excessive and over-inclusive drug testing and pre-filled prescription forms completed by non-physicians.  Even in the Eleventh Circuit, which has a deferential standard for evaluating the validity of physicians’ clinical judgments regarding medical necessity and a heightened standard for proving falsity (requiring evidence of an “objective false statement”), risky practices like the standing orders and the pre-signed, blank prescription pads Abovyan signed will not be viewed as an appropriate exercise of individualized clinical judgment entitled to any presumption of reasonableness.  The government takes seriously the central requirement in the Social Security Act that bills only be submitted for “expenses incurred for items or services, which . . . are . . . reasonable and necessary for the diagnosis or treatment of illness or injury.”  And the government expects that necessity decision to be made by the treating physician and informed by appropriate individualized patient evaluation.