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Recently, Chapman Law Group’s own Ronald W. Chapman Sr. was asked to join Texas attorney Mike Meltser on an episode of The Mike Meltser Podcast. The show looked into the ongoing health care fraud case involving 10 former NFL players.
Below is the transcript to the video, for those who prefer to read. Feel free to leave a comment at the bottom in our Disqus thread.
Mike Meltser: What is your background experience like?
Ronald Chapman: I started practicing full-time health care law probably about 1990. I started practicing law in 1984, but I always practice health care law. My very first trial was a health care trial, so I tell everybody that I practice health care law now for 33 years. At our firm we have 18 attorneys and we exclusively practice health care law. That’s it. Nothing other than health care law.
And joining us right now to give us the insight on this story with all of these former NFL players, 10 of them being indicted by the federal government for health care fraud, is Ron Chapman. He is the founder, shareholder, and CEO of Chapman Law Group, and has been practicing health care law for 33 years. Ron, how are you?
I’m doing great, thank you so much for inviting me.
Absolutely. Let’s start with this. So, the “Gene Upshaw NFL Player Health Reimbursement Account Plan,” can you explain to our audience what exactly this plan is?
Well this was a tax-exempt plan that was set up by the NFL in a players union with government, in the sense of the federal government agreeing not to tax it. So for the number of years that someone played in the NFL, they would be receiving credits, up to a total of $350,000. Those credits could then be used for health care payments for themselves, their spouse, or their children tax free.
OK that makes sense. So it seems to me that this is a pretty unique situation that was collectively bargained on behalf of players and the owners to set up something like this, where they could get this money tax free.
Oh, this is very unique. However, it’s not unusual, because ERISA [Employee Retirement Income Security Act] allows for a tax-free savings accounts for employers to do. So, if you think of the NFL as the employer for the football players, then it’s not that unusual. It’s kind of like a health care savings account.
OK, got it. And what is Cigna’s role in all of this? I know that they are the benefits administrator.
They’re just the person that supposedly tracks the beam. So, for example, they keep the money, they determine when the money’s paid out, and whether or not the documentations submitted by the player or the player’s representative was sufficient to support medical necessity for whatever it is that they want. Whether it’s a knee brace, medical treatment, medical bill, cryo chamber, hyperbolic chamber, or whatever it is that they need.
Do regular people have access to accounts like this, or is this something that is super unique to NFL players or maybe other kinds of athletes to set up this kind of plan?
I think the dollar volume of it is super unique to those types of individuals. Athletes that arguably get hurt a lot or hurt extensively and they need this type of thing. But anybody through their employer, or even on their own, can set up a health savings account can contribute X amount of dollars based on their income into the account. Those funds then go in tax free and come out tax free.
You say the dollar amount, so the dollar value being high, what are we talking about here in this plan?
The maximum credit that you’re allowed is $350,000. And you don’t pay anything into it; it’s based on a credit system that based on the number of years you were in the NFL prior to and then after 2011.
Got it. And I think it was, if I’m correct, Ron, that it’s three, and once a player has three credited seasons, all the sudden they have access to this account. Do I have that correct?
Yes, that’s called a vesting period. Most people would know that in 401(k) plans or profiteering plans with their employer, you have to be employed for two years or one year or three years before you can take advantage of the plan. In this case, they had to be employed by the NFL for three seasons, they get credited for each season, then the third season. They get credited for all three seasons.
OK, so let’s go into these indictments of these 10 players. How much trouble are these players in? Because I imagine you don’t want the federal government going after you.
No, you don’t. And usually, the federal government, when they obtain an indictment through a grand jury, they have a pretty good case. Not saying they have a bulletproof case, but they have a good case. So starting out, the NFL players and other people in the conspiracy are a long way behind the eight-ball so to speak. They’ve got a lot of catching up to do if they hope to win this. So when a case is brought, the charges, the evidence, it’s all pretty much there that the funds were paid out without a medical necessity.
That’s one of the things I’m wondering, because with something like this, as someone who is now a licensed attorney in the state of Texas, I know that law really operates in the gray area. But I’m looking at something like this, Ron, and it seems black and white, in that either these guys were buying this medical equipment or they were not. It seems black and white. Is that right or is that wrong?
Well to a layperson — and when I say layperson, I mean someone who is not a “health care fraud criminal attorney” — it kind of looks black and white. But when you peel back the onion, so to speak, and you get to the middle of it, it’s not so black and white.
The very first thing the government has to prove is, there was no medical necessity. So, to the extent that received any of the equipment or any of the care, the government has to prove that that care and that equipment was not medically necessary.
So, let’s assume they jump over that hurdle. In this case, the argument is that most of these folks never received the equipment and never received the medical care. So the next thing is that, the government has to prove knowledge. Some of these NFL players I’ve heard and read that some of them claim that they had no knowledge of this.
So the argument is that their account was used, and some third person would submit these requests for authorization to Cigna and then receive the money on their own. Now, when the government comes in, the government says, “Well, hold on.” Most of the players were paid between $2,000-$6,000 for each of these false receipts or false claims or requests for benefits that were sent in. Now, whether that’s true or not, I don’t know. But that’s the government’s proof there. So, if I were a player, the player has to prove that they had no knowledge of it. So the government holds the trump card here, and the trump card is something called deliberate ignorance.
So, the jury on knowledge will be given a jury instruction, and that jury instruction says that basically an individual can’t remain so ignorant of the process so that later on they can claim they didn’t know anything about it. And so what the government’s allowed to do is put in the facts and the circumstances. For example, “When you received a check at home for $2,000 dollars from ABC company, did you wonder where you got it from? Did you just deposit it?” “Well, ya know, I just spent it and I didn’t know who it was from.” That kind of thing, if it happened, is a good thing that goes toward deliberate ignorance and can be used to prove circumstantially that you actually had knowledge of the scheme.
OK, got it. So, if I’m in a situation where I’m one of these players, and let’s say as I’ve see, you know, alleged in the indictments and also reading of the stories about this, that somebody else is calling up and impersonating me. And, OK, well, even though clearly I’m not getting the medical equipment, I still might be criminally liable, because I’m getting those checks and I’m not going and investigating how that’s actually happening.
Well, that would be the argument because they would argue that you were deliberately ignorant of that. This argument would be that nobody receives a check for $2,000, or $1,000, or $6,000, or multiple checks for $2,000, that doesn’t at some point in time say, “What did I get this for?” It’s kind of like this. If you receive a refund check from the IRS for $50,000, yet your income is only $20,000 and you cash it, well, you have a problem. Because anybody would have known that you weren’t entitled to a $50,000 check.
That’s a great way to put it. Ron, can you explain to our audience about federal sentencing guidelines and how they are going to play a factor in what is going to be coming up in this case?
Sure. There is a number of things that work into federal sentencing guidelines. The first thing is a base offense, so this is fraud. So, the base offense is here is 6 points. That’s the base offence of fraud, which is 2v1 in this category.
On top of that you have to look at the loss amount. The loss amount is very critical. The loss amount then adds additional points on top of that, anything from 4 all the way up to 20 or 30 points on top of that. So what happens if you have a loss amount under a million dollars? I think the official points are 12.
So now you have a factor of 18, and I don’t want to get to much into the weeds, but assuming you don’t cooperate and you get big credits for getting someone else in trouble, you would then go to the guidelines, and you would look for 18 points, and to the right of that, there’s seven columns. The first one is, you had no prior offences, and it goes all the way to you’re a career criminal.
The judge would then have to sentence you within those guidelines theoretically. I say theoretically because a judge can go lower than those guidelines or higher than those guidelines with an explanation. The explanation that most defendants look for is an argument that they cooperated with the government called a “5K1,” that they operated with the government, that they provided information that led to the arrest or conviction of somebody else, arguably, that was involved in health care fraud worse than they were. Then, typically, the government will then ask the court to reduce the sentence by as much as 40%.
OK, so what do you think’s gonna happen in this situation with these indictments? You know, because they’re two different indictments — one against Krell Buck Halter and Carlos Rogers specifically, the other is against Robert McCune, John Eubanks, Tamarick Vanover, Clinton Portis, C.C. Brown, James Butler, Fred Bennett, and Etric Pruitt. Do you think that what’s likely gonna happen is that we’re gonna have a number of these guys testify against others? And it sounds like there were one or two real ringleaders of this specific scheme. So are we likely to see, let’s say, six to seven guys testifying and cooperate against the ring leaders in this situation?
Typically, you will. You’ll see a number of people that will turn on some other folks. The other thing in these indictments, they mention indicted and unindicted other co-conspirators, which leads me to believe that there are other folks that the government may have indicted but not released the indictment, or they decided not to indict them because their attorney states evidence. Remember these things come to light to the government usually on two circumstances. One is, through the analytics of Cigna, they were able to identify the fraud because of the outliers. Because of too much money going out, too many cryo chambers being purchased, or whatever it is, and then they can analyze it. The second way it comes out is that somebody on the inside tells the government.
OK, that makes sense. Bottom line, when you look at this, are we looking at a situation where some of these, you know, bigger names like Clinton Portis could legitimately be facing actual time in prison?
Well, they will be facing actual time in prison unless they cooperate with the government to the extent that the government gives them a significant break and puts them on probation. Health care fraud is rampant in this country; the government estimates between, you know, $2.5-$3 billion in health care fraud a year occurs in the United States. So, the only way to combat that is that they’re starting to give stiffer sentences.
Now they’re not stiff sentences in the sense that you’re gonna go away to prison for 10 years usually, but you can expect to get 18 months, two years, three years, four years and up for these kinds of things. And the fact that they are NFL actually makes it more likely that they’re going to get a higher sentence because a lot of your lower-level health care fraud criminals look at this and they say, “Hey, I defrauded TRICARE, which is a federal government program, out of $100,000 and I got five years. Why do these guys who defrauded $2 million, let’s say, and they only get a year?” And the government is cognizant of that. They have to make their sentencing make sense.
Well, the way you stated it, it embodies the moral dilemma in health care. The moral dilemma in health care is that the employer pays the bill, the medical doctor typically receives the benefit, and the individual could care less how much anything costs.
So, they’ll go out and get the most expensive stuff, they don’t care if the person is reimbursed for 10 times or whatever. So, in this case, there’s no physicians involved, it looks like, so again, in this case it’s pretty standard. The employers putting it in as a cost of employment, a health care benefit, and the employee saying, “Hey I’m not sick, I think this money’s mine. I want to get it out somehow.” So somebody develops the scheme so they can get it out without actually being sick. And what it does is, it defeats the whole purpose of health care.
I’m sure the NFL set this up because there are some NFL players that developed head injuries and other kinds of problems, and they legitimately needed the extra money to help them get extra equipment that a typical insurance company isn’t going to buy, like a cryochamber. They’re not gonna buy you a hyperbolic chamber to put in your house.
That’s right, that would be extremely surprising. So let’s say these allegations are true, this fund, the Gene Upshaw NFL Player Health Reimbursement Account Plan, it’s a tax-free fund. And, you know, we talked about it a little earlier, so the money that goes in is tax free, and the money that comes out is tax free, which as anybody knows is incredibly rare in the United States of America. Let’s say these allegations are true, the allegations and the indictment. Is the tax-exempt status of this plan now going to be in jeopardy for all of the other retired NFL players?
It would be. Now, I’m not a tax attorney, but I do understand that to have this particular benefit, the payout, the funds that are going to reimburse the players, whoever, have to be used for legitimate medical purposes. So if the medical necessity in the delivery of the durable medical equipment or service whatever, is not actually delivered, and cash is paid out to people towards the purpose of the plan, then if government finds that that’s enough to remove it’s tax exempt status, it would do that. And the government does do that on a regular basis. It doesn’t make the fron-page news, but a lot of tax exempts plans, a lot of tax exempt organizations, on any given month any given year, their tax exempt status is taken away. Because of a variety of things like this, the funds weren’t used for the purpose in which they were tax exempt.
Is there anything else that I haven’t asked you, Ron that you would like to add to the story at this point?
Well I guess the sad truth is, this story really isn’t as unique as people think, in that health care fraud is rampant. It’s everything from the local physician that overbills intentionally to get a little extra $20-$30 dollars, to marketers that call you on the phone and talk you into buying pain cream at $7,000 a tube that you don’t really need, or DME [Durable Medical Equipment] equipment.
So the federal government, they don’t have unlimited resources, but the resources they do have they use to go after these schemes. And when they identify them and decide to put their weight behind them, they go at them strong. I would bet that some people here, I don’t know about everybody, but some people are going to actually do real hard prison time over this event.
The other thing to talk about is the forfeiture. They will have to forfeit any profit or proceeds of this. And if its co-mingled with other money, maybe they’re gonna have to give up that money, too, plus the fines on top of this. So, typically, the government’s not only gonna give jail time, but if these folks are wealthy, the governments gonna get back significantly more than they spent out to give to Cigna, in reimbursing your account.
So, we could be looking at jail forfeiture and fines. Obviously a lot to look at when it comes to these indictments and what’s gonna happen over the next few months and the next few years as well. Ron, thank you so much for joining me on the Mike Meltser Podcast.
Thank you as well, Mike. I enjoyed myself. Have a great day.
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