Dermatologist Agrees To Pay $6.6 Million To Settle Allegations Of Fraudulent Billing Practices

KNOXVILLE, Tenn. – Dermatologist, John Y. Chung, M.D., and his practice Skin Cancer & Cosmetic Dermatology Center, P.C. (“SCCDC”), which operates 13 dermatology clinics in southeast Tennessee and north Georgia, have agreed to pay $6.6 million to resolve allegations that they violated the False Claims Act by knowingly submitting false claims to federal healthcare programs for Mohs Micrographic Surgeries and other dermatological procedures.

This settlement resolves allegations that Dr. Chung and SCCDC knowingly submitted false claims for payment to Medicare, Medicaid, and other government payors for Mohs procedures that were billed as if both the surgery and pathology portions of the procedures were performed by Dr. Chung, when in fact at least one portion was often performed by other individuals.  The settlement further resolves allegations that SCCDC regularly billed Medicare for multiple procedures, performed on the same patient on the same day, in a manner that improperly circumvented Medicare’s “multiple procedure reduction rule.”  The alleged misconduct occurred from 2010 through 2020.

“Government healthcare programs establish billing rules and guidelines to safeguard tax-payer funds.  Billions of dollars intended to cover the costs of healthcare services are lost every year to fraud, waste, and abuse, and when providers disregard billing requirements, the financial viability of public programs and the healthcare they provide are put at risk.  The U.S. Attorney’s Office will aggressively root out providers whose billing practices take advantage of public programs for their own private gain,” said U.S. Attorney Francis M. Hamilton III.

“When health care providers submit improper claims to federal health care programs, they waste valuable taxpayer dollars,” said Special Agent in Charge Tamala E. Miles of the Department of Health and Human Services Office of Inspector General (HHS-OIG).  “Working with our law enforcement partners, our agency will continue to protect federal health care programs from fraud, waste, and abuse to ensure they can be used for their intended purposes.”

“Health care fraud, a severe problem that impacts every American, costs our country billions each year, takes critical resources out of our health care system, and contributes to the rising cost of health care for everyone.  The FBI, along with our federal, state, and local partners, will continue to provide resources to investigate allegations of fraud in public programs and hold violators to account,” said FBI Special Agent in Charge Joseph E. Carrico, Knoxville Field Office.

“The VA OIG is dedicated to ensuring veterans receive the quality health care they deserve, and we will continue to work to make certain that VA healthcare programs are not compromised by fraudulent billing practices,” said Special Agent in Charge Kim R. Lampkins with the Department of Veterans Affairs Office of Inspector General’s Mid-Atlantic Field Office.  “The VA OIG thanks the US Attorney’s Office, and our law enforcement partners for their efforts in this investigation.”

“To protect the integrity of federal health care programs and the patients they serve, it is important that providers are compliant with billing rules and procedures,” said TVA OIG Inspector General Ben Wagner.  “The TVA OIG is committed to identifying and investigating healthcare false claims that negatively impact the people of the Tennessee Valley.  The TVA-OIG will continue to work tirelessly alongside our law enforcement partners to protect the reliability of federal healthcare programs, and prevent fraud, waste, and abuse.  The TVA OIG would like to thank the United States Attorney’s Office Eastern District of Tennessee for diligently pursing resolution of this case and ensuring funds were properly returned to TVA.”

“Health care providers that serve our nation’s military service members, retirees and their families are expected to meet the highest standards of ethical and professional behavior,” stated Special Agent in Charge Darrin K. Jones, DoD Office of Inspector General, Defense Criminal Investigative Service (DCIS), Southeast Field Office.  “This settlement sends a clear signal to those who take advantage of TRICARE for personal enrichment.”

“Our Medicaid Fraud Division works each day to uphold the integrity of Georgia’s Medicaid program.,” said Georgia Attorney General Chris Carr.  “This includes putting a stop to providers who submit false claims and take advantage of our publicly funded healthcare system.  This type of fraud and abuse will not be tolerated as we continue our efforts to protect taxpayer dollars no matter the amount.”

As part of the settlement, Chung and SCCDC entered an Integrity Agreement (IA) with the U.S. Department of Health and Human Services – Office of Inspector General (HHS-OIG), which promotes its future compliance with the statutes, regulations, program requirements, and written directives of Medicare and all other federal health care programs.  The IA focuses on the practice’s continuing obligation to accurately bill and properly submit reimbursement claims to government payors.

This investigation resulted from a coordinated effort between HHS-OIG (Nashville Field Office), the Federal Bureau of Investigation (Knoxville), Tennessee Bureau of Investigation, Defense Criminal Investigative Service, Tennessee Valley Authority – OIG, U.S. Department of Veterans Affairs – OIG, the U.S. Attorneys’ Office for the Eastern District of Tennessee, the Tennessee Attorney General’s Office, and the Georgia Attorney General’s Office.  The investigation was prompted by a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permits private parties to sue on behalf of the government for false claims, and to receive a share of any recovery.  The qui tam case is captioned United States, State of Tennessee and State of Georgia ex rel. Chambers v. Skin Cancer and Cosmetic Dermatology Ctr. and Chung, No. 1:20-CV-177 (E.D. Tenn.).  The relator’s share of the recovery will be $1.32 million.

Assistant U.S. Attorneys Jeremy Dykes and Alexa Ortiz Hadley represented the United States.  Senior Assistant Attorney General Tony Hullender represented the State of Tennessee, and Assistant Attorney General Sara Vann represented the State of Georgia.

The claims settled by this agreement are allegations only, and there has been no determination of liability.                                                                                

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