Feds and State Crack Down

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Cover Story – April 2013

Tex Med. 2013;109(4):18-24.

 By Crystal Zuzek 
Associate Editor

Cris Schade, MD, nearly fell out of his chair when he came across an online advertisement from a pain management clinic seeking a pain medicine physician. The ad declared the position required no experience and was a good end-of-career job opportunity. Dr. Schade, a Dallas area pain medicine specialist and past president of the Texas Pain Society (TPS), shared the job posting with his pain medicine colleagues.

 "We all had a good laugh. Any physicians who take that job will likely find themselves at the end of their careers," Dr. Schade said.

That's because the federal government and state agencies have stepped up efforts to curtail drug diversion. According to the U.S. Drug Enforcement Administration (DEA), diversion of hydrocodone products and pseudoephedrine continues to be a problem in Texas. Primary methods of diversion are illegal sale and distribution by health care professionals and workers, "doctor shopping" (going to a number of doctors to obtain prescriptions for a controlled pharmaceutical), forged prescriptions, pharmacy theft, and the Internet.

The Texas Medical Board (TMB) is cracking down on physician involvement in pill mills. These are illegitimate businesses that Dr. Schade says accept only cash, have only a storefront and no medical equipment, don't conduct any physical examinations or medical procedures, don't keep patient medical records, and often have huge crowds of people waiting to see the doctor.

TMB's authority over the ownership and operation of pain management clinics stems from legislation the Texas Medical Association supported during the 2009 legislative session. Senate Bill 911 by Sen. Tommy Williams (R-The Woodlands) directed TMB to adopt rules to ensure quality patient care and set personnel requirements at pain management clinics.

"Senate Bill 911 was a response to a need to find a balance between access to quality pain medicine care and preventing diversion," said Dr. Schade, who testified for the bill on behalf of TMA and TPS.

Mari Robinson, TMB executive director, says the board sees a wide range of physician involvement in pill mills.

"Some doctors we investigate were involved in a pill mill for a short period of time and had been recruited to work at the clinic for just a few months. Others own several clinics and are making millions of dollars," she said.

Ms. Robinson explains that simply being associated with a pill mill in some way doesn't lead to suspension or revocation of a physician's license. She says the board weighs the merits of each case to determine its actions.

"Some complaints the board receives involve nontherapeutic prescribing, not pill mill activity. Physicians engaged in nontherapeutic prescribing may need more education or may require having their charts monitored," she said.

Before agreeing to purchase, serve as medical director, or join a pain management clinic or any medical practice for that matter, physicians should perform due diligence to make certain the business is legitimate and financially solvent. They also should be aware of some red flags that may give them reason to pause.

Stiff Rules

The law requires the owner of a pain management clinic to be a physician practicing in Texas with an unrestricted license. He or she must be on site at least 33 percent of the clinic's operating hours and review at least 33 percent of the patient files. In addition, the clinic owner must not have been disciplined for inappropriately prescribing, dispensing, administering, supplying, or selling a controlled substance.

Before SB 911, TMB had no rules on owning and operating pain management clinics.

"I am personally very pleased with the work TMB has been doing in regard to these rogue, illegal clinics," Dr. Schade said.

 The law applies only to clinics that issue prescriptions for opioids, benzodiazepines, barbiturates, or carisoprodol monthly for at least 50 percent of their patients. Suboxone isn't included. Medical and dental schools, hospitals, hospices, and some other entities aren't subject to regulations. (See "Pain Management Clinic Certification Facts.")

Dr. Schade says the exemption is essential for surgeons and oncologists, for example, who prescribe controlled substances and pain medicine to many, if not all, of their patients.

Ms. Robinson says pill mill operators have developed schemes to try to get around the law. For instance, the board has investigated clinics that require every patient to bring a friend along to the appointment.

"One patient receives a prescription for opioids, for example, and the friend gets an allergy medication prescription. That way, the percentage of opioids prescribed falls below the 50-percent threshold for pain management clinics. Criminals are trying to circumvent the law by staying below the radar," Ms. Robinson said.

Ms. Robinson says complaints are the primary way TMB learns of potentially illegal prescribing of pain medications and controlled substances. In addition, she says, media coverage or contact from the Texas Department of Public Safety (DPS) or other law enforcement agencies can alert the board to possible criminal activity. Board rules stipulate that unless it would jeopardize an ongoing investigation, TMB will give a clinic at least five business days' notice before an on-site investigation. In addition to inspecting a pain management clinic, TMB rules authorize the board to examine a physician's documents, such as medical records.

TMB has conducted education and outreach for physicians related to pain management clinic regulations. Ms. Robinson says the board has information about the rules on its website, www.tmb.state.tx.us, and in its bulletin. 

TMB Takes Action

At press time, TMB had received 453 pain management clinic applications and issued active certificates to 219. According to Leigh Hopper, TMB public information officer, the remaining applicants had overdue renewals or had canceled their applications, or the board canceled the application due to disciplinary action.

The board has been busy enforcing the law.

At the medical board's February meeting, 45-year-old Akili Graham, MD, a Pearland family physician, agreed to a voluntary revocation of his license for nontherapeutic prescribing practices and pill mill-related activities. In the DEA's investigation of Dr. Graham, agents interviewed several employees – many of whom were unlicensed foreign medical graduates – who worked for the physician at four pain management clinics for which he held certificates. The employees admitted to giving prescriptions to patients Dr. Graham never evaluated.

In addition to losing his medical license, Dr. Graham faces criminal charges in Harris County on four counts of unlawfully operating a pain clinic.

The most severe penalty TMB can levy against a physician for violating pain management clinic rules is revoking his or her medical license. Ms. Hopper adds that to permanently remove a physician from practice, TMB must file the case with the State Office of Administrative Hearings (SOAH) or the physician must agree to surrender his or her license. Ms. Hopper was unable to say how many physicians' medical licenses had been suspended or revoked for pain management clinic violations because the board doesn't track that information.

In April 2011, TMB suspended the medical license of Gerald Ratinov, MD, 78, a Houston neurologist, based on his "unprofessional conduct likely to deceive, injure, or defraud the public." Dr. Ratinov was medical director of Hobby Medical Clinic, Abundant Life and Weight Loss Center, and Astrodome Pain Clinic in Houston. He also faces criminal charges.

DEA, which led the investigation in conjunction with the Harris County District Attorney's Office, DPS, and the Texas State Board of Pharmacy, says Dr. Ratinov used the clinics – along with some pharmacies – to fill fraudulent prescriptions without medical necessity. Authorities shut down the clinics and related pharmacies.

TMB documents show Dr. Ratinov had no contact with patients at the clinics. They say a foreign medical graduate not licensed to practice medicine in Texas filled out presigned prescriptions for patients, a violation of board rules.

As of November, the board had suspended the certification of 20 pain management clinics for violating TMB rules. Ms. Hopper says disciplinary actions commonly pertain to violations of board rules regarding operation of pain management clinics, failure to meet the standard of care, and prescribing controlled substances without a valid medical purpose or nontherapeutic prescribing.

Ms. Hopper says TMB doesn't track the number of pain management clinics it discovers operating without required certification. She says the information may be reflected in disciplinary actions the board takes against doctors. To view pain management clinic disciplinary actions, visit the TMB website.

At press time, TMB averaged 115 days to process pain management clinic applications. Ms. Hopper says "the delay is mostly on the applicants' side," noting that applicants are often slow to submit lacking documentation.

Physicians applying for pain management clinic certification must submit clinic ownership documents, which may include the following: 

  • Filings with the Secretary of State;
  • Sales tax certificates with the Texas Workforce Commission;
  • Internal Revenue Service (IRS) records for the clinic;
  • State franchise tax documents; and
  • Medicare and Medicaid provider enrollment applications and supplementary federal submissions showing to whom claims under these programs are assigned, paid, or payable. 

TMB may require additional documentation to determine clinic ownership. The clinic's proposed medical director and all physician owners must contact the National Practitioner Data Bank (NPDB) and the Healthcare Integrity and Protection Databank to search for their names and submit all information they find to TMB. Applicants must indicate the queries are for pain management clinic certification. The pain management clinic registration form is on the TMB website.

Ms. Robinson says the board may deny applications if the physician owner has a restricted license or a felony criminal record, or has been disciplined by the board for past nontherapeutic prescribing violations. 

Avoiding Discipline

A January article in Becker's Hospital Review discusses the measures physicians can take to avoid medical board discipline for legitimate controlled substance prescribing.

"Overprescribing and Medical Board Enforcement: How to Avoid Discipline," by Los Angeles attorneys Nicholas Jurkowitz and Farooq Mir, warns physicians that it is easier for medical boards to monitor the prescriptions they're writing for their patients. They refer to the Texas Prescription Monitoring Program (PMP), which tracks Schedule II through Schedule V prescription drug dispensing. (Read "Small Problems, Big Impact," Texas Medicine, December 2012, pages 41-44.)

The medical board can check PMP to examine a physician's controlled substance prescribing patterns and access patients' controlled substance prescription information. Ms. Robinson says TMB queries the database each time it receives a complaint against a physician for nontherapeutic prescribing. "That helps us assess whether there is a reason to believe the physician is engaged in nontherapeutic prescribing."

Mr. Jurkowitz and Mr. Mir recommend physicians register with databases that generate prescription information and allow them to access regular reports of patients' prescription drug history. They also advise physicians to conduct thorough patient examinations and to make detailed documentation in patient charts.

TPS Executive Director Krista Crockett says she expects Senator Williams to file two bills pertaining to pain management this legislative session. She said one piece of legislation would likely put into statute possible changes to TMB pain management clinic rules. She anticipated another bill would enhance the PMP drug-monitoring database by making it easier to use. At press time, the bills hadn't been filed, and Ms. Crockett couldn't comment on the exact provisions of the legislation.

Should physicians find themselves in the medical board's crosshairs, Mr. Jurkowitz and Mr. Mir say proper documentation that justifies prescribing practices is essential.

"In maintaining proper documentation, the physician should keep a record of all drugs dispensed in the office and all prescriptions filled out, detailed descriptions of the tests or examinations performed, and detailed descriptions of the pain or symptoms of the patient," they wrote.  

Due Diligence Essential

San Antonio attorney Mike Kreager says physicians should do their homework before purchasing or assuming management of any existing medical practice so they know what they're getting into. The due diligence process allows physicians to obtain underlying information about a practice that reveals potential legal claims against them.

 Mr. Kreager recommends that physicians:  

  • Review public filings with the Texas Secretary of State's Office for ownership and financial information about the practice.
  • Search county records to determine whether the practice has been sued.
  • Request at least three years of financial statements to examine profits and losses.
  • Review the practice's past three years of IRS tax returns.
  • Review the practice's general ledger to determine payment patterns and see ongoing vendor contracts that may need to be honored or terminated.
  • Interview existing employees to unearth any problems the seller may not have revealed.
  • Review payer contracts and payer mix.
  • Review the practice's procedures to comply with workers' compensation rules on pain management and ask the Texas Workforce Commission about any complaints against the practice.
  • Check with TMB on any pending or resolved patient complaints or agency investigations.
  • Check NPDB to learn if any physicians in the practice have liability settlements or patient complaints against them.
  • Contact the Texas Health and Human Services Commission Office of Inspector General to make sure Medicare and Medicaid have not excluded any of the physicians in the practice. 

Mr. Kreager says a thorough due diligence process takes from two weeks to a month. He advises physicians to use a team approach that involves a certified public accountant to evaluate financial information, an attorney to assess litigation risk, and either an experienced practice administrator or a consulting group to review coding, documentation, and billing practices, recordkeeping, and other management matters.  

TMA Practice Consulting offers customized coding and documentation reviews and chart audits. For information, contact TMA Practice Consulting by telephone at (800) 523-8776 or by email. All services are available for a fee based on a practice's needs.

Mr. Kreager warns that determining whether a practice is under criminal investigation may be difficult.

"Usually, ongoing criminal investigations are confidential. In federal criminal investigations, you are likely dealing with sealed indictments that are not accessible by the public," he said.

Mr. Kreager urges physicians to closely scrutinize pain management clinics before getting involved in any capacity.

"Pain management clinics are squarely within the crosshairs of law enforcement agencies. Physicians should ask for records that indicate how many controlled substance prescriptions the clinic writes and obtain a summary of prescription patterns to identify whether controlled substances are being overprescribed and written without documentation of medical necessity," he said.

Purchasing an existing practice has additional inherent legal risks that make due diligence essential.

"Due diligence will help purchasing physicians uncover pending, unresolved claims from vendors, former employees, and payers. If physicians assume ownership of a practice that was engaged in inadequate or fraudulent documentation of Medicare or Medicaid claims, their medical licenses could be at risk," Mr. Kreager said.

He adds that physicians could find themselves in tax trouble if the practice's prior owners failed to pay employment taxes or contributions to employee retirement plans. 

Red Flags Waving?

While performing due diligence doesn't guarantee a purchasing physician will never encounter any problems, the process does help a physician identify red flags that could signal trouble down the road.

"Investment on the front end can help doctors avoid a nightmare on the back end," Mr. Kreager said.

One of the most concerning possible red flags, he says, involves a practice that bills under one provider number for all services. This could indicate the practice is billing government or private payers for the work of a physician who's not physically present at the time of service. Mr. Kreager says physicians should also closely examine practices that offer ancillary services.

"Physicians should approach infusion, imaging, and laboratory services with a greater degree of diligence. They should pay close attention to correct coding and billing for these services, as well as appropriate supervision," he said.

Practices that report inordinate revenues should also be red-flagged, Mr. Kreager says, adding that illegitimate pain management clinics often fall into this category.

"To achieve inordinate revenues means shortcuts are being taken in managing patients' pain – mainly through overprescribing without a patient evaluation or a determination of medical necessity," he said.

Ms. Robinson has also identified some red flags physicians should be aware of, including: 

  • The clinic's owner isn't a physician, as required by law,
  • The clinic doesn't have any medical equipment, and
  • Patient charts are identical and lack documentation of a thorough medical evaluation.  

"Pill mills are looking for physician names to cloak themselves in legitimacy, and if physicians aren't thorough, they could wind up in an unfortunate situation," Ms. Robinson said. 

Crystal Zuzek can be reached by telephone at (800) 880-1300, ext. 1385, or (512) 370-1385; by fax at (512) 370-1629; or by email at crystal.zuzek[at]texmed[dot]org.  


Pain Management Clinic Certification Facts  

A pain management clinic cannot operate in Texas unless the owner and operator is a medical director who has an active, unrestricted Texas medical license and a certificate of registration for the clinic. 

In addition, an owner, employee, or person with whom the clinic contracts for services may not:   

  • Have been denied a license by the Drug Enforcement Administration (DEA) or a state public safety agency allowing him or her to prescribe, dispense, administer, supply, or sell a controlled substance;
  • Have held a license issued by DEA or a state public safety agency in any jurisdiction, under which the person may prescribe, dispense, administer, supply, or sell a controlled substance, that has been restricted; or
  • Have been subject to disciplinary action by any licensing entity for conduct that was a result of inappropriately prescribing, dispensing, administering, supplying, or selling a controlled substance.   

Also, anyone who has been convicted of, pled no contest to, or received deferred adjudication for a felony or misdemeanor for distributing illegal prescription drugs or a controlled substance cannot own a pain management clinic, wholly or in part.

Each year, pain management clinic medical directors must ensure that all employees are properly licensed (if one is required for the position), qualified for employment, and have at least 10 hours of continuing medical education on pain management.

Certificates are valid for two years. Certificate holders have a 180-day grace period from the expiration date to renew the certificate; however, a clinic may not continue to operate while the certificate is expired.

Regulations on the registration and operation of pain management clinics do not apply to:   

  • A medical or dental school or associated outpatient clinic;
  • A hospital, including any outpatient facility or clinic;
  • A hospice established under state or federal law;
  • A facility maintained or operated by the state;
  • A federal clinic;
  • A nonprofit health organization certified by the Texas Medical Board;
  • A clinic owned or operated by a physician who uses other forms or treatment, including surgery, and writes prescriptions for a majority of his or her patients; or
  • A clinic owned or operated by an advanced practice nurse who uses other forms of treatment with the issuance of a prescription for a majority of the patients.  

Source: Texas Medical Board  

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TMA's Pain Management Resources  

TMA's Physician Oncology Education Program (POEP) and the Texas Pain Society (TPS) offer a home-study course, Pain Medicine: Accidental Lethal Overdoses. The course teaches physicians the principles of chronic opioid therapy, including appraising a patient's risk for substance abuse, avoiding dangerous drug combinations, and assessing therapeutic benefit.

The 13-page course costs $35 and offers continuing medical education credit, including 1.5 hours of ethics. The course file is available through the TMA Education Center. Physicians can request a hard copy in the mail by emailing Laura Wells or calling her at (800) 880-1300, ext. 1673, or (512) 370-1673.

At TexMed 2012, the Texas Medical Association House of Delegates passed a resolution developed by the Texas Pain Society and the Harris County Medical Society on responsible opioid prescribing for pain management.

The policy states TMA "supports multidimensional strategies to optimize the treatment of pain and works to educate Texas physicians about the latest evidence-based literature on responsible opioid analgesia management with the goal of reducing the risk to patients and enhancing the public safety regarding opioid use, misuse, abuse, diversion, and nontherapeutic prescribing."  

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Last Updated On

May 13, 2016

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