Saturday, June 27, 2015

DaVita To Pay $450 Million For Violating False Claims Act

DaVita Healthcare Partners, Inc., the largest provider of dialysis services in the United States, has agreed to pay $450 million to resolve claims that it violated the False Claims Act by knowingly creating unnecessary waste in administering the drugs Zemplar and Venofer to dialysis patients, and then billing the federal government for such avoidable waste.  Davita is headquartered in Denver, Colorado, and has dialysis clinics in 46 states and the District of Columbia.

“This settlement is an example of what can be accomplished as a result of the successful cooperation between the government and whistleblowers in protecting our vital federal health care programs,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.

This civil settlement resolves allegations brought in a whistleblower action that DaVita devised and employed dosing grids and/or protocols specifically designed to create unnecessary waste of the drugs Venofer and Zemplar.  These drugs are packaged in single-use vials, which are intended for one-time use. Sometimes, the amount of the drug in the vials does not match the dosage specified by the physician, resulting in the remainder of the drug in the vial being discarded.

At the time of the alleged scheme, Medicare would reimburse a dialysis provider for certain waste if the dialysis provider – acting in good faith – discarded the remainder of the drug contained in a single-use vial after administering the requisite dose and/or quantity of the drug to a Medicare patient.

The whistleblowers’ complaint alleged that, to create unnecessary Zemplar waste, DaVita required its employees to provide Zemplar to dialysis patients pursuant to mandatory and wasteful “dosing grids.”  Zemplar, a Vitamin D supplement usually administered at every dialysis session, is packaged in single-use vial sizes of 2 mcg, 5 mcg, and 10 mcg. Davita allegedly created unnecessary waste by requiring its employees to provide Zemplar to dialysis patients pursuant to mandatory “dosing grids,” which were designed to maximize the amount of Zemplar administered to patients.  DaVita then allegedly billed the government not only for the amount of Zemplar administered to patients, but also for the amount “wasted.”
With regard to Venofer, an iron supplement packaged only in a single-use vial size of 100 mg during the relevant time period, DaVita allegedly enacted protocols that required nurses to administer this drug in small amounts, and at frequent intervals, to maximize wastage. For instance, in certain instances, DaVita’s protocol called for a patient to receive 25 mg of Venofer per week, which resulted in 300 mg of waste per month that was billed to the Government.  In contrast, if the order had been filled by giving the patient the entirety of a single 100 mg vial, once per month, no waste would have resulted.

In 2011, the Centers for Medicare and Medicaid Services changed the manner by which it reimbursed dialysis providers for such drugs.  As a consequence, wastage derived from single-use vials was no longer profitable, and, as a result, DaVita allegedly changed its practices and reduced its drug wastage dramatically.

“Through personal sacrifice and courage, two whistleblowers exposed knowingly wasteful dosing practices designed simply to increase profits and improperly drain the government’s resources,” said Acting U.S. Attorney John Horn of the Northern District of Georgia.  “This settlement returns hundreds of millions of dollars to the treasury that had been improperly obtained by DaVita through these wasteful practices.”

The allegations resolved today arose from a lawsuit filed and ultimately litigated to this succesful resolution by two whistleblowers, Dr. Alon Vanier and nurse Daniel Barbir, under the qui tam provisions of the False Claims Act.  Under the Act, private citizens can bring suit on behalf of the government for false claims and share in any recovery.  The United States may intervene in the action or, as in this case, the whistleblower may pursue the matter.

Monday, June 22, 2015

$712 Million in Medicare Fraud Discovered

Attorney General Loretta E. Lynch and Department of Health and Human Services (HHS) Secretary Sylvia Mathews Burwell announced today a nationwide sweep led by the Medicare Fraud Strike Force in 17 districts, resulting in charges against 243 individuals, including 46 doctors, nurses and other licensed medical professionals, for their alleged participation in Medicare fraud schemes involving approximately $712 million in false billings.  In addition, the Centers for Medicare & Medicaid Services (CMS) also suspended a number of providers using its suspension authority as provided in the Affordable Care Act.  This coordinated takedown is the largest in Strike Force history, both in terms of the number of defendants charged and loss amount.

The defendants are charged with various health care fraud-related crimes, including conspiracy to commit health care fraud, violations of the anti-kickback statutes, money laundering and aggravated identity theft.  The charges are based on a variety of alleged fraud schemes involving various medical treatments and services, including home health care, psychotherapy, physical and occupational therapy, durable medical equipment and pharmacy fraud.  More than 44 of the defendants arrested are charged with fraud related to the Medicare prescription drug benefit program known as Part D, which is the fastest-growing component of the Medicare program overall.

“This action represents the largest criminal health care fraud takedown in the history of the Department of Justice, and it adds to an already remarkable record of enforcement,” said Attorney General Lynch.  “The defendants charged include doctors, patient recruiters, home health care providers, pharmacy owners, and others.  They billed for equipment that wasn’t provided, for care that wasn’t needed, and for services that weren’t rendered.

“This Administration is committed to fighting fraud and protecting taxpayer dollars in Medicare and Medicaid,” said Secretary Burwell.  “This takedown adds to the hundreds of millions we have saved through fraud prevention since the Affordable Care Act was passed.  With increased resources that have allowed the Strike Force to expand and new tools, like enhanced screening and enrollment requirements, tough new rules and sentences for criminals, and advanced predictive modeling technology, we have managed to better find and fight fraud as well as stop it before it starts.”

According to court documents, the defendants participated in alleged schemes to submit claims to Medicare and Medicaid for treatments that were medically unnecessary and often never provided.  In many cases, patient recruiters, Medicare beneficiaries and other co-conspirators allegedly were paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could then submit fraudulent bills to Medicare for services that were medically unnecessary or never performed. 

Collectively, the doctors, nurses, licensed medical professionals, health care company owners and others charged are accused of conspiring to submit a total of approximately $712 million in fraudulent billing.

Thursday, June 18, 2015

Merck Fraudulently Promoted Pink Eye Medicine Costs Them $5.9 Million

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According to Reuters and the Wall Street Journal Merck & Co Inc has agreed to pay $5.9 million to resolve claims that a former unit fraudulently promoted a drug used to treat pink eye for unapproved purposes, U.S. authorities announced on Wednesday.

Manhattan U.S. Attorney Preet Bharara said Inspire Pharmaceuticals, which Merck acquired in 2011 and later sold, promoted its drug AzaSite to healthcare providers for uses the Food and Drug Administration had not approved as safe and effective.
While the FDA had approved AzaSite for treating bacterial conjunctivitis, or pink eye, Inspire sought more revenue by marketing the drug for the non-approved treatment of another eye condition, blepharitis, according to a lawsuit.
The lawsuit said that Inspire from 2008 through May 2011 misleadingly marketed to doctors purported anti-inflammatory properties of AzaSite that were not supported by substantial evidence or clinical experience.
The marketing caused doctors to prescribe AzaSite for uses not covered by federal healthcare programs, which paid millions of dollars in false claims, the lawsuit said.
As part of the settlement, which will go to the United States and various state governments, Inspire made several admissions related to its conduct, Bharara's office said.
Lainie Keller, a Merck spokeswoman, said the company was "glad to put this behind us," adding that the conduct at issue occurred prior to Merck acquiring Inspire, which it later sold to Akorn Inc in 2013.
The case was initiated in 2010 by a purported whistleblower, Jill DeGuzman, under the False Claims Act, and the United States subsequently intervened in it. DeGuzman's lawyer did not immediately respond to a request for comment.

Tuesday, June 16, 2015

Syngenta Expected to Reimburse Losses of Around $2.9 Billion

Viptera, also known as MIR162, was created by Syngenta as a corn seed that prevented corn pests from attacking the crop. It was widely sold for the 2011 crop year. It was during this time that industry participants began to worry about the lack of China Viptera approval. Syngenta, however, expanded sales for the next crop years to allegedly benefit from their monopoly on the MIR162 corn trait.

In 2013, China rejected Viptera entirely, meaning that any corn exports containing even a trace of MIR162 were sent back. This resulted in a wide rejection of U.S. corn, as Syngenta corn had contaminated most of the crops. It was estimated that between $1 billion and $2.9 billion were lost due to Syngenta’s actions.
The class action lawsuit states, “Syngenta actively misled farmers, industry participants and others about the importance of the Chinese market . . . the timing of when China was likely to approve MIR162 . . . and its ability to contain the infiltration of [Viptera] into the U.S. corn supply.”
The class action lawsuit also points out that a new GMO corn seed was released for the 2014 crop year that has also not received China approval.

Syngenta Lawsuits

Many Syngenta lawsuits and class action lawsuits have been filed against the company, claiming the defendant misled those involved in the corn industry so they could better profit on their monopoly of MIR162.
The plaintiffs in this class action lawsuit include Kenneth Borah, a Texas resident who planted, harvested, and sold Syngenta corn. Plaintiff Scott Lemke, Otis Shinn, William Keller White, Linda Cain Wilson, and the Wright Family LP are also named plaintiffs in this Syngenta lawsuit. All were involved in the corn industry and allegedly suffered from significant financial losses because of Syngenta’s Viptera corn.
Counts in this class action lawsuit include violation of the Lanham Act, negligence, tortious interference with existing and/or prospective business relationships, trespass to chattels, private nuisance, violations of state deceptive and unfair trade practices acts and consumer protection statutes, among other claims.
It is expected that this class action lawsuit will be consolidated into the Syngenta multidistrict litigation in Kansas, where a large number of claims concerning MIR162 have already been consolidated.

Friday, June 12, 2015

Healthcare Insurers Fighting Back Big Pharma Pricing

Health insurers are pushing to link the cost of specialty medicines to how well they work to improve a patient’s condition, a bid to contain prescription drug prices after decades in which pharmaceutical companies could charge whatever the market would bear.

 

The shift is coming as insurers absorb mounting bills for drugs with eye-popping prices and brace for a slew of new therapies for diseases such as hepatitis C, cystic fibrosis, breast cancer, lung cancer, and leukemia. Those emerging treatments could cost US government-paid health programs such as Medicare nearly $50 billion over the next decade, according to an estimate by an insurance industry trade group, America’s Health Insurance Plans.


Massachusetts biopharma companies are bracing for payment changes, fearful they could cut into profits or dampen the enthusiasm of investors. But they are also hoping to capitalize on the so-called pay for performance trend with a new generation of targeted therapies that can effectively treat a higher share of patients with specific genetic mutations.“Pay for performance is the Holy Grail,” said Genzyme president David Meeker. “The challenge is defining the outcome and being able to accurately track and record it.”Among those leading the drive for new pricing is Express Scripts, a company that bargains with drug makers on behalf of employers and insurers. It is advancing a plan that would offer different reimbursement rates for drugs that treat more than one type of cancer based on how long the drugs extend lives. Insurers, including Harvard Pilgrim Health Care and Blue Cross Blue Shield of Massachusetts, are examining that payment arrangement and others, such as rebates to patients and insurance plans in cases where drugs aren’t effective.

The new payment criteria are likely to emerge slowly and vary widely based on types of medications and payers, which include insurance companies and some government plans such as Medicaid. But proponents agree they need to rein in prices of specialty drugs, which can run up to tens of thousands or hundreds of thousands of dollars a year.

“We’re concerned about the sustainability of the health care system,” said Steve Miller, chief medical officer for St. Louis-based Express Scripts, the nation’s largest pharmacy benefit manager whose customers include Boston-based Blue Cross. “You can’t have double-digit increases in drug prices year after year, especially when you have 7,000 drugs in development.”

Concerns over drug prices were fueled by a popular $1,000-a-pill hepatitis C treatment from Gilead Sciences Inc. of Foster City, Calif., that took payers by surprise last year, curing thousands of patients but inflicting financial losses on Medicaid insurers across the country.

Those worries have been underscored by a string of business deals — such as last month’s $8.4 billion agreement by Connecticut’s Alexion Pharmaceuticals Inc. to buy Synageva BioPharma Corp. — that seemed to be premised on the companies’ plans to sell drugs for rare diseases at exorbitant prices.

“We’re either going to take this into our own hands or it’s going to be done to us,” said John Maraganore, chief executive of Alnylam Pharmaceuticals Inc., a Cambridge company developing a portfolio of rare disease drugs based on the gene-silencing science of RNA interference.

Both insurers and drug makers acknowledge there could be disagreements — over reporting and monitoring systems, and ultimately over prices — when they start to negotiate the new payment frameworks based on paying for value.

Unlike countries in Europe, where government agencies set prices for prescription drugs, US regulators approve therapies on the basis of safety and effectiveness, leaving drug makers to contract with many individual health insurers on price. The largest US payer, Medicare, which insures older Americans, is sidelined by a law preventing it from negotiating prices that might otherwise set a target for bargaining by smaller commercial insurers.

Biogen Inc. of Cambridge, which markets a portfolio of multiple sclerosis medicines, has already signed performance-based pricing contracts in other countries. In the United Kingdom, the company and three competitors are evaluated by the national Department of Health on a number of measures for helping patients with the neurodegenerative disease.

US health insurers, which have long talked about paying for a drug’s value, now see an opening. It remains difficult to quantify value for thousands of medications ranging from acute care drugs like antibiotics to chronic disease treatments for conditions like diabetes and high blood pressure. But advances in information technology are making it easier for doctors, hospitals, and insurers to keep track of patients and how they respond to prescribed therapies.

That will be critical as Express Scripts prepares to roll out its “indication-specific” payment structure. It would reimburse varying amounts to drug companies based on how long medicines prescribed for two different cancers — lung and pancreatic cancer, for example — extend the lives of patients with each disease. But some Express Scripts clients say they would have to upgrade their electronic information and payment systems to track such outcomes.

Blue Cross Blue Shield of Massachusetts, for instance, will probably have to weigh “operational issues” as one factor in deciding whether to initially sign on with the Express Scripts plan, said Tony Dodek, the insurer’s medical director.

“It’s an intriguing idea,” Dodek said. Health “providers, payers, and employers have been trying to put a value on these very expensive drugs, and this could be one way to do it.”

Another way is being considered by Harvard Pilgrim, the Wellesley-based insurer that negotiates directly with drug makers. Chief medical officer Michael Sherman said it is developing a performance-based rebate model that could be applied to treatments such as a new class of cholesterol-lowering drugs. For example, it might require rebates if the drugs don’t lead to a reduction in hospitalization for strokes or chest pain.

“It’s a huge change for the pharma companies,” Sherman said. “They realize their prior argument — that they can’t be held responsible for the [patient] outcome — doesn’t work any more and they have to get with the program.”

 

Trinity Ordered To Pay Settlement Of $663 Million

Joshua Harman, a Virginian with two small highway safety companies, made a discovery in late 2011 that perhaps only a guardrail maker could: A big competitor had changed the dimensions of its roadside safety device by as much as an inch here and there, he said, without telling federal regulators.

As designed, Trinity Industries Inc.’s ET-Plus system was meant to turn the end of a guardrail into a de facto shock absorber. The altered units, as Harman saw it, were locking up when hit, spearing cars and their occupants.

 

Harman, 46, spent 3 1/2 years trying to prove his point, driving hundreds of thousands of miles to inspect twisted guardrails at crash sites. In 2012 he sued Trinity, accusing it of hiding the potentially deadly alterations from the Federal Highway Administration. On Tuesday, almost eight months after a Texas jury agreed Trinity had defrauded taxpayers, the judge issued a final penalty: Trinity must pay $663 million, with $199 million of that going to Harman and the rest to the government.

It was one of the largest awards to taxpayers under the U.S. False Claims Act as well as the largest to an individual whistle-blower, said Patrick Burns, co-director of the nonprofit group Taxpayers Against Fraud Education Fund.

Harman, who lost his left leg in a construction accident two decades ago, said he brought the case to raise awareness about a safety risk that he says cost many victims their limbs. At least nine deaths have been linked in personal-injury lawsuits to the ET-Plus.

“I have sacrificed everything I’ve got to facilitate this situation,” Harman said. “With this $663 million judgment, it opens the eyes, hopefully, of the nation.”

Harman, whose guardrail manufacturing company filed for bankruptcy protection in March, may never collect on the award if Trinity, the biggest U.S. maker of highway safety equipment, wins on appeal.

Jeff Eller, a spokesman for Dallas-based Trinity, said in an e-mail that “the judgment is erroneous and should be reversed in its entirety.”

Trinity has said the changes didn’t detract from the safety of its ET-Plus units, which have been successfully tested multiple times. The company, whose shares have fallen 18 percent since the verdict, is defending more than 20 lawsuits over the safety of the ET-Plus.

One day after the October verdict, the FHWA, which evaluates highway devices before declaring them eligible for federal reimbursement, ordered a review of the ET-Plus. The system passed all eight crash tests since then, the agency said in March.

Wednesday, June 10, 2015

TracFone To Pay $40 Million in False Claims Settlemet

On Jan. 28, a settlement was reached in the FTC TracFone lawsuit, meaning TracFone Wireless Inc. will pay $40 million to their consumers to resolve claims that the company falsely promoted their “unlimited” data plans only to allegedly slash data transfer speeds when customers had exceeded certain data limits.

The Federal Trade Commission (FTC) filed this lawsuit against TracFone for allegedly misleading consumers about the exact nature of the advertised $45 per month TracFone unlimited data plans offered by various TracFone brands, which include Straight Talk, Net10, Simple Mobile, and Telcel America. According to the FTC TracFone lawsuit, the company would allow consumers to purchase the “unlimited” data plan, but later reduce or completely cut off the mobile data plan when a consumer exceeded fixed data limits during a 30 day period. This business practice is known as “throttling.”

The FTC TracFone lawsuit alleges that until 2013, consumers were unware of TracFone’s data “throttling” practice, but even that disclosure was hidden among TracFone fine print or even on the backside of a TracFone mobile phone’s packaging — places that made it unlikely a consumer would see the data throttling disclosure.

The FTC further alleges that TracFone and its participating brands have employed this data throttling practice since 2009 and would reportedly reduce a consumers mobile phone service anywhere from 60 to 90 percent. The data throttling usually began to occur when a TracFone customer used one to three gigabytes of data. If a customer used four or five gigabytes, the company would allegedly suspend the data services. When a consumer directly complained to TracFone about the throttling practice, they were finally warned about the consequences of “excessive data usage” by a TracFone prerecorded message.

This is not the first time the FTC has gone after a phone provider for unfair and misleading data plans. In October of last year, the FTC sued AT&T for similar alleged throttling data practices, which the company failed to properly disclose to its consumers. This case was later settled, with AT&T paying $105 million to consumers.

This FTC lawsuit is also not the first time TracFone has been sued for false advertising regarding its unlimited data plan. In 2013, a throttling class action lawsuit was filed against Wal-Mart and TracFone for falsely advertising Straight Talk cellphone plans as “unlimited,” when in fact the company would reduce or terminate an user’s mobile plan if they went over certain data limits. This TracFone class action lawsuit demonstrates the FTC’s claim that the company has been employing their data “throttling” strategy since 2009.

In the recent FTC TracFone lawsuit and subsequent refund agreement, the agency claims that there exists company internal documents demonstrating that the data throttling practices served no technical purpose, like reducing network data congestion; rather, TracFone employed throttling in order cut the cost of providing unlimited mobile data services.

Saturday, June 6, 2015

Wilbur Huff Sentenced to 12 Years and More Than $108 Million

Wilbur Anthony Huff, 53, of Caneyville and Louisville, Kentucky, was also ordered to pay more than $108 million in restitution for committing various tax crimes that caused more than $50 million in losses to the Internal Revenue Service (IRS), and a massive fraud that involved the bribery of bank officials, the fraudulent purchase of an insurance company, and the defrauding of insurance regulators and an investment bank.  In December 2014, Huff pleaded guilty before U.S. District Judge Noemi Reice Buchwald of the Southern District of New York, who imposed today’s sentence.

“Anthony Huff and his co-conspirators stole millions of dollars from taxpayers and engaged in extensive frauds, all in the pursuit of additional property, luxury cars and the like,” said U.S. Attorney Bharara.  “His crimes have earned him 12 years in prison.  I would like to thank our law enforcement partners for their assistance on this case.”

According to the information, plea agreement, sentencing submissions and statements made during court proceedings:
Huff was a businessman who controlled numerous entities located throughout the United States (Huff-Controlled Entities).  Huff controlled the companies and their finances, using them to orchestrate a $53 million fraud on the IRS and other schemes that spanned four states, involving tax violations, bank bribery, fraud on bank regulators and the fraudulent purchase of an insurance company.  As part of his crimes, Huff concealed his control of the Huff-Controlled Entities by installing other individuals to oversee the companies’ day-to-day functions and to serve as the companies’ titular owners, directors, or officers.  Huff also maintained a corrupt relationship with Park Avenue Bank and Charles J. Antonucci Sr., the bank’s president and chief executive officer, and Matthew L. Morris, the bank’s senior vice president. 

Huff further conspired with Morris, Antonucci and others to defraud Oklahoma insurance regulators and others by making misrepresentations and omissions regarding the source of $37.5 million used to purchase Providence Property and Casualty Insurance Company, an insurance company based in Oklahoma that provided workers’ compensation insurance for O2HR’s clients and to whom O2HR owed a significant debt.

 

Wednesday, June 3, 2015

First Tennessee Bank To Pay Settlement For False Claims Act Violation



First Tennessee Bank N.A. has agreed to pay the United States $212.5 million to resolve allegations that it violated the False Claims Act by knowingly originating and underwriting mortgage loans insured by the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) that did not meet applicable requirements, the Justice Department announced today.

Between January 2006 and October 2008, First Tennessee, through its subsidiary First Horizon Home Loans Corporation (First Horizon), participated in the FHA insurance program as a Direct Endorsement Lender (DEL).  As a DEL, First Tennessee had the authority to originate, underwrite and endorse mortgages for FHA insurance.  If a DEL such as First Tennessee approves a mortgage loan for FHA insurance and the loan later defaults, the holder of the loan may submit an insurance claim to HUD, FHA’s parent agency, for the losses resulting from the defaulted loan.  Under the DEL program, neither the FHA nor HUD reviews a loan before it is endorsed for FHA insurance.  DELs such as First Tennessee are therefore required to follow program rules designed to ensure that they are properly underwriting and certifying mortgages for FHA insurance, to maintain a quality control program that can prevent and correct deficiencies in their underwriting practices and to self-report any deficient loans identified by their quality control program.  In August 2008, First Tennessee sold First Horizon to MetLife Bank N.A. (MetLife), a wholly-owned subsidiary of MetLife Inc., which thereafter originated FHA-insured mortgages under the MetLife name.  In February 2015, MetLife agreed to pay $123.5 million to resolve its False Claims Act liability arising from its FHA originations after it acquired First Horizon from First Tennessee.

The settlement announced today resolves allegations that First Tennessee failed to comply with FHA origination, underwriting and quality control requirements.  As part of the settlement, First Tennessee admitted to the following facts: From January 2006 through October 2008, it repeatedly certified for FHA insurance mortgage loans that did not meet HUD underwriting requirements.  Beginning in late 2007, First Tennessee significantly increased its FHA originations.  The quality of First Tennessee’s FHA underwriting significantly decreased during 2008 as its FHA lending increased.  Beginning no later than early 2008, First Tennessee became aware that a substantial percentage of its FHA loans were not eligible for FHA mortgage insurance due to its own quality control findings.  These findings were routinely shared with First Tennessee’s senior managers.  Despite internally acknowledging that hundreds of its FHA mortgages had material deficiencies, and despite its obligation to self-report findings of material violations of FHA requirements, First Tennessee failed to report even a single deficient mortgage to FHA.  First Tennessee’s conduct caused FHA to insure hundreds of loans that were not eligible for insurance and, as a result, FHA suffered substantial losses when it later paid insurance claims on those loans.