Court vindicates Nevada doctor in latest twist of fraud case

A federal judge ruled that a physician was abiding by Medicare's advice in submitting claims for pulmonary stress tests. The government is pursuing an appeal.

By Amy Lynn Sorrel, AMNews staff. Sept. 4, 2006.

Wired witnesses, tapped phones and whistle-blowers. This may sound like plot features in a spy movie, but it's real life for Nevada physician R.D. Prabhu, MD. The federal government has been investigating the internist and pulmonology specialist on and off for more than 13 years.

Dr. Prabhu's story just took a new turn. A federal court in July found that the government's fraud charges didn't hold up because the doctor was just following Medicare instructions.

The Justice Dept. accused Dr. Prabhu of knowingly submitting unlawful bills for simple pulmonary stress tests as part of a pulmonary rehabilitation program. The government alleged that the doctor had violated the False Claims Act because the tests were not covered by Medicare and because he had failed to document their medical necessity for some patients.

But the U.S. District Court for the District of Nevada found that "Dr. Prabhu has always acted in good faith in seeking to understand the government's rules ... in an area rife with confusion."

The decision is a rare victory for doctors, said Robert S. Salcido, a Washington, D.C.-based attorney for Dr. Prabhu. Physicians are often forced to settle such disputes with the government, even when they believe they are acting appropriately, because the financial stakes are so high.

"The case is a beacon of light for doctors," said Salcido, a former Justice Dept. civil fraud lawyer. The decision is significant because it demonstrates that "where there is no government standard letting [doctors] know their conduct is wrong, there is a strong likelihood they will prevail."