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NextCare settles medical testing fraud complaint

BY JIM HALL

NextCare Urgent Care, a national chain of walk-in clinics, paid $10 million this summer to settle a federal complaint that it defrauded patients and their insurance companies by putting patients through thousands of unnecessary tests.

Yet NextCare, which has clinics in Stafford and Spotsylvania counties, says that it did nothing wrong.

And Mary Washington Healthcare, its partner in Virginia, says it was an investor in NextCare and was not responsible for what federal investigators say was a yearlong, company-wide scheme to bilk its customers.

“They’ve always operated and managed the clinics,” said Walt Kiwall, executive vice president and chief operating officer for Mary Washington. “All the staff are employed by them. The whole system is a NextCare system.”

Mary Washington is a partner with NextCare in six urgent care clinics in the region. The partnership began in 2008 with Mary Washington owning 70 percent of the business. In 2010, NextCare increased its ownership share to 50 percent.

It was during this time that NextCare began recommending to patients that they get a battery of tests that federal investigators describe as “medically unnecessary and essentially worthless.”

The tests were for allergies, breathing and respiratory infections. If a patient had all three tests, the bill was $732. Local doctors heard from their patients about the costs and complained to both Mary Washington and NextCare.

The testing program is described in a federal lawsuit filed last year in U.S. District Court in Charlotte. Five states, including Virginia, joined in the civil action. NextCare is based in Arizona and has 67 clinics in seven states.

At least one former NextCare employee helped investigators build the case, and the employee shared in the settlement.

Virginia Urgent Care, NextCare’s partnership with Mary Washington, was named as a defendant. Mary Washington did not pay anything in the settlement, said Mary Washington and NextCare officials.

NextCare settled the suit in July without admitting any wrongdoing, and it continues to say that it did nothing wrong.

“There was never any proof shown, or any physician that ever determined any medical necessity was inaccurate. We completely disagree with everything in that complaint,” said John Julian, CEO of NextCare, in an Oct. 18 phone interview.

Julian said his company paid to resolve the complaint to avoid a lengthy court fight.

“Here we are sitting in a room with the federal government, and they’re saying we question the medical necessity of those tests,” Julian said. “In order for the company to get through this process, rather than try to go back and review hundreds of thousands of claims, we chose to do a blanket settlement.”

DAILY TEST QUOTAS

The 58-page federal complaint describes NextCare as a desperate company, unable to consistently meet payroll and searching for ways to make money.

According to the complaint, Dr. John Shufeldt, Nextcare’s founder and then-CEO, decided that the best way to increase revenues was to recommend allergy and breathing tests for all patients and a test for respiratory infections for those with cold or flu-like symptoms.

The tests were done from May 2009 through April 2010 at all NextCare clinics, including the three clinics then operating in the Fredericksburg area, according to the federal complaint.

When patients visited NextCare clinics, a medical assistant recommended the allergy test during the initial interview.

“NextCare effectively placed judgment regarding medical necessity in the hands of medical assistants and clerks, as opposed to medical providers,” the complaint says.

If the patient consented to the test, the medical assistant performed it without consulting a doctor.

If the patient did not consent to the test, NextCare required its doctors to ask again.

The allergy tests were done on everyone “including babies, children and elderly patients,” according to the lawsuit.

Patients who agreed to the test received 62 separate skin pricks on their backs.

“Every patient got the same battery of tests, regardless of the patient’s past or present health status and regardless of whether the allergen existed in the environment in which the patient lived,” the lawsuit says.

The test cost $620.

If the patient tested positive for an allergen, he or she received daily drops of an extract under the tongue, a therapy not approved by the FDA.

The company set daily quotas for all clinics. The goal for August 2009, for example, was 4,960 allergy tests company-wide. By Aug. 17, clinics had done 1,100 tests, according to court papers.

NextCare told clinic managers who did not meet their goals that they would be fired, as would any provider who objected or refused to participate in the program, according to court papers.

NextCare workers also did a breathing test on every patient before doing the allergy test. Called a spirometry test, it measured how much air patients inhaled and exhaled and how fast they exhaled. The test cost $57.

“Despite having no complaints of respiratory problems, patients who visited NextCare clinics were unnecessarily treated with spirometry testing, and government payers paid the bill,” the lawsuit says.

The company did a third battery of tests on patients with cold or flu-like symptoms, according to the complaint.

Its workers took nasal swabs from patients and sent the swabs to a lab in Alabama to test for 22 kinds of viral and bacterial infections.

The test cost $55.

‘THERE WERE CONCERNS’

In 2009, Fredericksburg-area doctors began hearing about the testing program from their patients. Patients said that they went to a NextCare office at night or on the weekend for a relatively simple problem and left with bills costing hundreds of dollars.

Patients were responsible for at least some of these costs through their insurance premiums, deductibles and copays, and through taxes to support government programs such as Medicare and Medicaid.

Local doctors started advising patients not to go to the clinics, and some, including Dr. Pamela Mancini, a Fredericksburg pediatrician, posted signs in their offices.

Mancini’s “notice to patients” said that NextCare “seems to be over-testing for some minor illnesses. Some charges have been huge and I believe unnecessary.”

Shufeldt, former CEO, visited the area in January 2010 to open a new NextCare office in Prince William County. While here, he met with Fredericksburg-area doctors to hear their complaints.

“There were concerns raised about how much testing was being done,” Kiwall said.

Added Kiwall, “He listened and backed off” the testing program here.

No criminal charges have been filed against Shufeldt or any NextCare employee, Julian, the CEO, said.

Mancini, the pediatrician, said last week that the federal complaint validates the complaints that she and other local doctors had.

“It wasn’t a good, solid way to practice medicine,” she said. “It was a frank money-grab.”

As for refunds to patients, Julian said NextCare has no plans to offer them.

“Keep in mind the patients came into the clinic to be seen because they were ill,” he said. “If we did an extra test, it doesn’t cost the patient any extra money. It would have been billed to a third-party payer.”

Patients with questions about their payments to NextCare during the testing program can call NextCare at 480/289-7901.

Jim Hall: 540/374-5433

jhall@freelancestar.com

SHUFELDT ON THE TESTING PROGRAM

Dr. John Shufeldt, former CEO of NextCare, was adamant that his clinics test patients for allergies, regardless of why the patients were there, according to a federal complaint.

Court papers show that in May 2009, he wrote to senior managers about the importance of the testing program:

“I cannot stress enough how important this program is to our financial well-being. The successful implementation of this initiative could literally be our saving factor, which would allow us to come close to our 2009 budget.”

Later, in a July 2009 email, Shufeldt set a goal of five allergy tests per clinic per day. He told his managers:

“Beginning Friday, you are strictly accountable for these goals, so I need to know immediately if you have any barriers which would impede your success. The accomplishment of these goals are integral to our future; consequently I will be looking at reports seven days a week.”

Shufeldt is a lawyer and an emergency-room doctor. He resigned as CEO in 2010.

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