You Should Be Scared About This…

The government is coming after you…even if you did nothing wrong.


Physical Therapy Private Practices Being Charged With Fraud

You never think about physical therapists as being a danger to society, or the country, but that’s the new campaign spearheaded by Medicare and the government.

Physical therapists are the “flavor of the month” in the government’s pursuit for more monies in this never ending saga of Medicare running out of money. Considering that these fines are running into the millions and possible prison sentences, this “fight against fraud” has become a very serious matter for our profession.

Some notable recent cases against therapists:**

  1. Physical therapy clinics accused of false Medicare claims agree to pay $2.78 million
  2. Weston Physical Therapist Charged With Federal Health Care Fraud
  3. Old Saybrook Physical Therapist Sentenced, Agrees to Pay $328,828 to Resolve False Claims Act Liability

**It is public knowledge but I want to say that I don’t like publicizing this type of news. Especially when a fellow brother or sister has undergone suffering. I do believe that this will save someone–someone from a hell of their own. I apologize in advance to those involved in the cases I am mentioning. My heart goes out to you.

If you look closely into these cases, you’ll find that this could happen to any one of us. Many therapists are making similar, if not same, mistakes today.  What’s truly worrisome is that these simple “mistakes” are being labeled and prosecuted by the government as “FRAUD” and federal crimes. The punishments do not meet the crime, and there is little mercy.

What’s even more scary is that most therapists charged never knew they were doing anything wrong. Most of the “laws” they were supposedly breaking are in fine print, obscure, or ill-defined. No one was hurt, they had physician orders, and patients loved the care. This did not save them from being treated like criminals.  Many report being intimidated, frightened and scared to death by the officials involved. It’s not surprising that most take a plea bargain–I mean how do you fight the government right? This is bullying at a higher level and it doesn’t seem like it will stop any time soon unless the public is made aware of it.

Audit proofing and documentation is the answer

A typical plea bargain is made up of a hefty fine including a suspension or revocation of your license. A plea is like a WIN for the prosecution who is essentially the district attorney or attorney general, and the PT board. Yes, I did say the PT board. They are not on your side. They exist to investigate licensees and build up cases. If they don’t investigate and prosecute, they are not doing their jobs. Their budgets get cut, and more. The PT board is usually the one doing most of the initial data or evidence gathering and they are the one’s essentially helping build the legal cases against therapists. They are NOT on your side. Most therapists don’t know this.

Most therapists do NOT fight. The reason being that fighting the PT board and the legal system can take over a year of time, a whole lot of money, and even more stress. Not many attorneys (even healthcare attorneys) know much about physical therapy. Historically we have never undergone legal scrutiny (why should we). They will charge you as they would a physician, which is a lot. It can range anywhere between $50,000 to over $400,000 depending on the length of charges and court time, etc. Your malpractice insurance doesn’t cover much–maybe $10k.

One therapist chose to fight.

She is a therapist in Arizona and was served with over 76 pages of charges. You might ask, “How can one get over 76 pages of charges filed against her and not have done anything wrong?” She believed she didn’t do anything wrong so she chose to fight rather then take a plea bargain. She is an incredibly strong and courageous individual. Here’s a short segment of my interview with her.


In the end, after 12-months of hell–six days in court–over $200,000–she was found NOT GUILTY of all charges. This is seemingly what’s happening across the country. I get reports regularly, and the story is all the same–the government is going on a shopping spree with their campaign of “Fighting Fraud”.  I’m not saying they aren’t finding real criminals out there, they probably are. But they are all too happy about hitting hard and not caring where their punches land. In most cases with physical therapists involved, the punishment is not fitting the so-called crime.

“What’s Going On Here?!”

The government is desperately attempting to keep Medicare afloat. It seems the Obama administration will do anything to avoid Medicare from going under while on his watch, even if it means sacrificing small healthcare professionals that don’t have the wherewithal to defend themselves. They are aggressively doing everything they can to find monies. Learn more here>>>.

We live in the best country in the world but right now Medicare needs money, the government seems to want more money, and they are stopping at nothing in order to get it.

  1. They have hired Recovery Audit Contractors (RAC auditors) who are more like “bounty hunters” bullying the innocent. They get a percentage of the monies recovered so they are aggressive to say the least. In some cases they are threatening and inappropriate.
  2. They have also put out an award for consumers to turn in providers for any suspicious activity, such as offering free services or improper billings. (How can consumers understand coding and billing when even business experts hardly can?).


Does this make any sense when CEO’s of insurance companies are allowed to make record high profits, making 80 and 100 million in a single-year, by…1) cutting off benefits from deserved patients who never missed a premium payment, letting them die and 2) delaying payments to providers and playing games until the money falls through the cracks. Learn more here>>>

All the while the government makes laws that put a limit on how much a consumer can even sue an insurance company, and now they are putting bounties on the heads of therapists, the ones providing care to the patients… Angry, yet?

 Do not be a victim. Do not get caught up in this horrific game they are playing!

Fraud cases usually start with small minor “mistakes” made by providers. Things such as…

  1. Not documenting correctly.
  2. Not being specific enough.
  3. Not noting rationales.
  4. Not having prior level of function defined.
  5. Not logging duration time of sessions.
  6. Clerical errors.
  7. Not documenting quantifiable progress, and more.

“Merely having a prescription, doing an eval note, and establishing goals is no longer going to cut it anymore.” -James Ko, PT

All the while there are clinics across the country committing true fraud. I personally know of clinics where they have patients sign-in, get some juice, eat some pastries, watch a movie, get a massage, sit in the jacuzzi and then sign-out, after which it’s billed to medicare as “physical therapy”. The patients rarely even see a real physical therapist because there might be a physician in the building. Instead of going after these true criminals, the government is pursuing easier targets. Criminals appear to be too smart and require more work to collect evidence against, so innocent practitioners who are never trying to hide anything, and are much more cooperative (no subpoenas usually necessary to get in), are singled-out as easier prey. It’s sad but it’s true.

How to Avoid Fraud Charges and Become “Bullet-Proof”

These tools and tips may save you from going through hell some day:

1. Begin documenting important items only (not the SOAP you learned in school).

A small and seemingly insignificant request for more documentation can lead to scrutiny. Nearly every case starts here. Make sure to carefully look over your documentation before sending to anyone. If you choose to make any additions or edits, make sure to initial, date, and explain why the late entry. Do NOT try and hide the fact you made a late entry. This could make a bad situation worse (obstruction of justice). The bottom line is learn how to document correctly. Take the IndeFree course; this is not a sales pitch. I don’t need to do that. Document only that which is on their “checklist” of items–what they are looking for. If your documentation is not systemized with all the necessary components you leave yourself vulnerable to charges of fraud. Their rationale is, “If it’s not written (or legible), it doesn’t exist.” And if it doesn’t exist yet you chose to bill and get paid then you committed fraud. And the punishment is severe.  Make sure you are including important items such as prior level of function, quantifiable progress, time durations, medical necessity statements, safety concern reports, etc.  The list goes on but if you have it systemized it can be quick and efficient.

“Most therapists are NOT documenting correctly making them easy prey for auditors.”
-James Ko, PT

Consider taking the IndeFree Advanced Billing, Coding, Collections, and Audit-Proofing course.

2. Don’t cooperate or let them in when showing up unexpectedly.

Auditors and officials are notorious for showing up unexpectedly with no warning or notice. That’s protocol. They know they have a better chance of obtaining evidence against you if catching you off guard. They will also attempt to appear when owner is not present. They know they can manipulate employees more easily than owners. Number 5 below will discuss training your staff. They will request access to charts and want to interview your staff. Do NOT let them.  You are not obligated in any way to give them access to anything or speak with them. Make them come back and have a legal representative present. Many fraud charges could have been avoided if the owner/staff did not welcome them in and present them with an opportunity to gather data (evidence).

3. Have legal representation during a scheduled audit or face to face meeting.

This is your legal right. Absent a subpoena, you have the right to say no. Even if president Obama himself came knocking on your door, you should say “Come back with a subpoena and when my attorney is present.” Your malpractice insurance covers only around $10,000. You may want to get the limit increased if your policy allows it.

4. Don’t allow your staff to be questioned without an attorney present.

This is very important. In many cases, employee testimonies become a main part of their evidence against you. They don’t record the interrogations. Instead they hand write what they think they heard. Later it’s used against you. They also frighten the hell out of your staff which leads them to turn against the owner.

5. Train your staff to NOT let anyone in, or say anything.

Do this today. Make sure your staff is trained to say “NO.” No one is allowed. Without the owners authorization, and the patient’s authorization, no one is to gain access to sensitive health information (or anything else), even if they are carrying a badge–especially if they are carrying a badge. This is HIPAA law. Many cases against therapists could have been avoided if staff were trained properly. Write me and I’ll personally send you a copy of the policy you should have staff sign and put in their files (or download here).

I sincerely hope you never get accused of fraud, I really do. It’s hell. I know why you went into this profession. There are a lot of easier ways to make money. Your intent is to do good. I hope you get a chance to read this and sleep better at night. I know too many who wish they would have seen this ahead of time.

Written by James Ko, PT
He is an advocate for the physical therapist in private practice. He regularly serves as a defense expert witness in cases where therapists are being unjustly accused of charges. He’s also the Founder of the Therapist Advocacy Group (TAG).

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James Ko

I believe... "It's not the strongest practices that survive and grow, nor the most intelligent, but the ones most adaptable to change." I'm a physical therapist, private practice owner, and founder of IndeFree Association. I like reading James Patterson, Nicholas Sparks, enjoy golfing and playing guitar. I love playing with Mac and Cozy! For over 15 years, I've helped thousands of practices grow and succeed. This is my dedication.

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