Cosmetic surgeries are on the rise. One study of cosmetic surgery data found that body procedures like tummy tucks, buttock augmentation, and liposuction increased by 63 percent from 2020 to 2021. Facelifts were up 54 percent. And breast procedures were up 48 percent. According to that study, Americans spent over $14.6 billion on aesthetic procedures in 2021 with surgical revenues increasing by 63 percent.
But, for the most part, that $14.6 billion did not come from taxpayers. Or at least it was not supposed to.
That is because federal health care programs do not cover medical procedures that are not “medically necessary.” That includes elective cosmetic surgery procedures.
Some healthcare providers, however, see procedures that are covered by federal payors and that are similar to non-covered cosmetic procedures, and bill those codes to federal payors, going so far as to create medical records to support the covered procedure. That is when surgeons and their employers get into big trouble. And one Iowa surgeon found himself in that big trouble last week.
DOJ’s Latest False Claims Act Complaint
On May 9, 2023, the U.S. Department of Justice filed a False Claims Act complaint against an Iowa surgeon, alleging that the surgeon, among other things, billed government-funded payors for elective cosmetic surgeries that were not medically necessary, but took steps to mask those surgeries to make them appear to be other, covered procedures. Specifically, the government’s complaint gives examples of giving patients “tummy tucks” following the patients’ “interest in body contouring,” but billing Medicaid for “hernia repairs.”
The Justice Department pointed out in its press release the harsh reality the surgeon is now facing: that if he is found liable under the False Claims Act, the United States will obtain a judgment against him for three times the amount the government paid for the false claims, and a penalty of at least $13,508 for each false claim. The allegations are that the surgeon caused the submission of over a thousand claims, meaning the penalties alone could amount to more than $13 million. Yes, that’s big trouble.
And the liability was not limited to the surgeon himself. The Justice Department’s press release states that the surgeon’s employer, a physician group, already settled its liability for the surgeon’s acts for over $600,000.
This False Claims Act complaint serves as a reminder to all healthcare providers that they need to have an eye on medical necessity.
Mis-categorizing elective procedures in search of a covered CPT code carries extreme risk under the False Claims Act. This is because one of the hardest concepts to prove in a False Claims Act case is that the provider acted “knowingly.” Boiled down, this “knowingly” requirement is what separates false claims subject to trebling and penalties from mere overpayments. When providers mis-categorize a procedure, it gives the government great evidence that the provider knew he or she was doing something wrong.
This scenario may be most common in the area of elective, cosmetic surgeries like tummy tucks, face lifts, buttock and breast augmentation, and the like, but there have been other settlements involving non-covered conduct that providers billed as other, covered procedures. Examples include podiatrists who claim routine nail trimmings as surgical debridements, and providers who provide services like electric acupuncture and claim the service as a neurostimulator implantation.
Any time health systems and physicians provide elective procedures, they risk the scrutiny of federal law enforcement. That is especially so when the providers advertise targeting patients seeking elective cosmetic surgeries. For example, some vascular surgeons advertise their services treating unsightly spider veins or varicose veins—veins that are visible and typically dark blue. Vascular surgeons soliciting these patients who are seeking only to improve their appearance, but then claim medical conditions necessitating treatment that Medicare covers, run a tremendous risk of DOJ scrutiny.
And not just DOJ scrutiny, but whistleblower scrutiny as well. The Iowa surgeon sued on May 9 came on the DOJ’s radar because another plastic surgeon at the defendant’s physician group filed a qui tam alleging fraud. That whistleblowing surgeon stands to receive a percentage of whatever recovery the United States obtains from the defendant surgeon, plus a percentage of the $600,000+ settlement with the physician group.
If you are concerned about whether your claims or claims by a physician employed by your health system or physician group are compliant, or if you find yourself the target of a Justice Department investigation, it is critical that you receive knowledgeable legal advice from health care attorneys familiar with the issues you face. To that end, contact your Husch Blackwell attorney today with any questions or concerns.
 “The Aesthetic Society Releases Annual Statistics Revealing Significant Increases in Face, Breast and Body in 2021,” Apr. 11, 2022, available at https://www.prnewswire.com/news-releases/the-aesthetic-society-releases-annual-statistics-revealing-significant-increases-in-face-breast-and-body-in-2021-301522417.html.
 42 U.S.C. § 1320c5(a)(1) & (3); see also 42 U.S.C. § 1395y(a)(1)(A).
 See United States ex rel. Steele v. Smith, 19:cv:4011, Doc. 45 (N.D. Ia. May 9, 2023) (government’s complaint in intervention).
 Id. at ¶¶ 55–62.
 “United States Files Complaint Alleging Iowa Surgeon Caused Submission of False Claims to Medicare,” DOJ Press Release, May 15, 2023, available at https://www.justice.gov/usao-ndia/pr/united-states-files-complaint-alleging-iowa-surgeon-caused-submission-false-claims.
 See, e.g., “Lexington Foot and Ankle Center Agrees to Pay $750,000 to Resolve Allegations of Violations of the False Claims Act,” DOJ Press Release, May 4, 2020, available at https://www.justice.gov/usao-edky/pr/lexington-foot-and-ankle-center-agrees-pay-750000-resolve-allegations-violations-false.
 See, e.g., “Texas Company Agrees to Reimburse Medicare for Improper Billing Related to Neurostimulators,” DOJ Press Release, Jan. 12, 2021, available at https://www.justice.gov/usao-edtx/pr/texas-company-agrees-reimburse-medicare-improper-billing-related-neurostimulators.