Medical Billing Giant — Zotec Partners — Named Defendant In Wrongful Termination Case

Zotec may face additional charges of Defrauding Medicare, as former employee alleges systematic Medicare Claims Abuse.

CARMEL, INDIANA, September 11, 2014. In a classic David vs. Goliath legal confrontation, a former employee of Zotec Partners, one of the largest medical billing companies in the country, claims that he was wrongfully and unlawfully terminated after exposing and challenging Zotec’s self-serving billing protocols designed to defraud Medicare. Peter Bonewitz is representing himself in this Civil Suit filed in the U.S. District Court – Southern District of Indiana. This is an action under the False Claims Act – Retaliation Provision, as amended, 31 U.S.C. § 3730(h) et seq., to correct unlawful employment discrimination against the Plaintiff for engaging in protected activity under this provision.

In the action, Mr. Bonewitz claims that Carmel-based Zotec Partners terminated his employment after just two and a half months when he began raising red flags, and was considered a clear and present danger to the firm. The suit states: “Plaintiff determined that many of the processes and, in fact, a good portion of the Company’s business model was based on a scheme that could be a violation of the federal False Claims Act.” 

Bonewitz’s position at Zotec Partners involved the design and building of proprietary data warehouses to maintain and store client/patient data. Zotec conducts medical billing for clients that include large provider networks, radiology groups, anesthesiology groups, radiology and anesthesiology associates, virtual radiology providers, physician’s networks and surgery centers.

The suit alleges that Bonewitz discovered “combined business practices” of foreign outsourcing, using inexperienced intern coders and a lack of appropriate systems for handling disputes. Bonewitz states he learned that medical coders in India and inexperienced interns were coding medical bills in isolation and without physician supervision or involvement. He was concerned that interns were deliberately being given specific types of complex claims to code, including knee surgery that is prone to mistakes. Such complex coding by isolated inexperienced interns could lead to repeated false claims and unnecessary charges to Medicare and could be designed to shield the owners from fraud implications.

While working on a project involving the creation of logic for a new IVR automated phone system, Bonewitz noticed that phone representatives were intentionally not taking notes as part of their instruction. In reviewing numerous recorded conversations, he found there were no associated notes. In fact, many calls involving Medicare disputes were simply labeled “Canceled”. Bonewitz also learned that “Logging” was not being used in the Electronic Billing Center to track or handle Medicare member disputes, and that there were no tracking processes so that the coder in India and the physician elsewhere could communicate to resolve billing discrepancies. 

Furthermore, a common complaint that Bonewitz heard was about a lack of diagnosis codes in the bills, which he worried was just another means of preventing a Medicare member from disputing a Medicare bill. His suit states, “It appeared that the Company’s intent was to make challenging a bill so difficult that Medicare members would give up pursuing disputes so that Medicare would bear the expense.”

In addition, Bonewitz felt that a new automated medical coding system that had been developed externally and was being tested, would further shield how coding was being performed. Bonewitz was concerned that the intent of this new coding system was to defraud Medicare/CMS with minimal human interaction. On October 14, 2011, Bonewitz met with the manager of the Business Intelligence department to discuss his concerns that many aspects of the company were fraudulent and a violation of the False Claims Act. One week later Bonewitz was terminated without cause. There had been no prior notice, verbal or in writing, of any performance concerns. 

The False Claims Act Retaliation Provision, under which Bonewitz is suing Zotec Partners, protects employees “from being discharged, demoted, suspended, threatened or harassed, or in any other manner discriminated against” because he or she investigated, reported or sought to stop the employer from engaging in practices to defraud the United States Government. Bonewitz believes that employing inexperienced interns and foreign outsourced coders who lacked protections under the False Claims Act Retaliation Provision, was premeditated with the intention to strategically and systematically prevent fraud from being reported to Medicare. Bonewitz’s suit alleges: “Zotec Partners actions were intentional, deliberate, willful and in callous disregard of plaintiff’s rights.”

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