Tennessee Dermatology Practice Pays $6.6M to Resolve Billing Fraud Allegations

A major dermatology provider based in the southeastern United States has agreed to pay $6.6 million to resolve allegations of improper billing practices involving federal healthcare programs. The settlement addresses claims that Skin Cancer & Cosmetic Dermatology Center (SCCDC) and its founder, Dr. John Y. Chung, engaged in dermatology billing fraud over a ten-year period.

Improper Medicare Billing Practices Uncovered

The allegations stem from procedures conducted between 2010 and 2020, including Mohs Micrographic Surgeries billed to Medicare, Medicaid, and other federal healthcare programs. Federal investigators assert that the clinic billed for both the surgical and pathology components of these procedures as if they were performed solely by Dr. Chung—even when other individuals performed part of the services.

The investigation also revealed that SCCDC frequently billed for multiple procedures performed on the same patient on the same day in a way that violated Medicare’s multiple procedure reduction rule, a safeguard designed to control overbilling.

This case is one of several recent efforts by federal and state authorities to crack down on dermatology billing fraud, which continues to be a growing concern in government-funded healthcare.

Whistleblower Lawsuit Led to Federal Investigation

The investigation was initiated by a whistleblower lawsuit filed under the False Claims Act’s qui tam provisions, which allow private individuals to report fraud on behalf of the government. In this case, the whistleblower—known as the relator—will receive $1.32 million as their share of the recovery.

The collaborative investigation was led by the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), the FBI, the Department of Veterans Affairs OIG, the Defense Criminal Investigative Service (DCIS), and multiple state agencies from Tennessee and Georgia.

As part of the settlement, SCCDC entered into an Integrity Agreement with HHS-OIG, committing the practice to strengthened billing compliance procedures and continued oversight of its reimbursement practices across federal health programs.

Protecting the Integrity of Healthcare Systems

Federal officials involved in the case emphasized the importance of compliance in preserving the integrity of public healthcare programs like Medicare, Medicaid, TRICARE, and the VA system. This resolution is another strong example of the government’s dedication to combatting dermatology billing fraud and safeguarding taxpayer dollars.

This case serves as a reminder to healthcare providers across the country: accurate billing is not optional, and violations can carry steep financial and reputational consequences.

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This article is for informational purposes only and should not be considered legal advice.