Monday, September 8, 2014

Whistleblower Settlements Summary 2014

There were a number of settlements and verdicts around the country in whistleblower cases in August. This is an area of that is expanding rapidly.


The nation’s largest operator of acute care hospitals, Community Health Systems, Inc., has agreed to pay $98 million to settle claims that the company billed government health care programs for inpatient services that should have been billed as significantly less expensive outpatient or observation services. CHS was said to have engaged in a corporate-driven scheme to increase inpatient admissions of Medicare, Medicaid and TRICARE beneficiaries older than 65. The government further claimed that the inpatient admissions were not medically necessary and should have been provided in a less costly outpatient or observation setting.

The settlement resolves lawsuits filed by several whistleblowers under the qui tam provisions of the False Claims Act. Since January 2009, the Justice Department has recovered more than $20.2 billion through False Claims Act cases.


Pharmaceutical distributor McKesson Corp. will pay $18 million to settle whistleblower claims that it improperly set temperature monitors outside contractual limits when shipping vaccines for the Centers for Disease Control and Prevention . The U.S. Department of Justice announced the settlement on August 8. San Francisco-based McKesson signed a contract with the CDC in 2007 requiring it to set electronic devices in shipping containers to detect whether temperatures strayed outside a slim range just above freezing. The False Claims Act suit, filed by a former financial director, alleged the company instead set the monitors for a much wider range that would have allowed vaccines to freeze or reach room temperature without alerting personnel.

The CDC said the monitors were a backup system and that the vaccines were properly packed in insulated containers and transported at the right temperatures. McKesson maintained that the temperature monitors complied with the contract. The relator in the , Terrell Fox, alleged that from April to November, McKesson shipped vaccines from manufacturers to health care providers and set monitors to go off only if the vaccines were colder than -1 degree Celsius and warmer than 25 degrees.
It was alleged that the vaccines were supposed to stay refrigerated and never freeze and that the correct range should have been from 2 to 8 degrees Celsius. Fox said that McKesson violated the contract and knowingly submitted false claims in an attempt to avoid liability for replacing potentially ruined vaccines. The vaccines shipped by McKesson were intended for children. 


Vascular Solutions (VSI) will pay $520,000 to resolve allegations that it caused false claims to be submitted to federal health programs by marketing a medical device for the ablation (or sealing) of perforator veins without U.S. Food and Drug Administration (FDA) approval and despite the failure of its own clinical trial. VSI, a medical device company based in Minneapolis, Minn., markets and sells medical devices that treat varicose veins by sealing the veins with laser energy – endovenous laser ablation. Their products include consoles, which generate the laser energy, and accessory kits.
In 2010, DeSalle Bui, a former Vascular Solutions salesperson, sued the company. The U.S. Attorney’s Office in Texas subsequently intervened in the case. The accused VSI of “off-label promotion” of its Vari-Lase products, saying the company marketed the product for the treatment of perforator veins despite the fact that it wasn’t approved for such uses. The alleged that the improper promotion of the product, as well as kickbacks that VSI paid to physicians, caused the government to lose roughly $20 million, as health care providers submitted claims to government programs such as Medicare.


A jury has returned a $730,000 verdict in favor of a whistleblower who reported on an unethical pain management study on prison inmates by researchers at the University of California, Davis. Janet Keyzer, a former UC Davis administrative nurse, claimed in a that her career was ruined when she raised questions about whether the research project on physically and mentally disabled inmates at San Quentin Prison had obtained consent from its subjects. The Superior Court jury’s verdict was in favor of the 59-year-old Keyzer. She had worked for the university’s Center for Healthcare Policy and Research for more than nine years at the time of her termination in 2007.

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