Adventist Health Systems To Pay Out $118.7 Million

Three former employees of a North Carolina hospital were the first to expose an alleged scheme by Adventist Health System to pay doctors excessive compensation to lock in their patient referrals to Adventist-owned hospitals, clinics and other outpatient services in Florida, North Carolina, Tennessee and Texas.

The US Justice Department announced today that Adventist will pay a total of $118.7 million to the federal government and four states to settle a whistleblower (qui tam) lawsuit filed in December 2012 by those former employees. The settlement agreement also covers a separate qui tam lawsuit filed in 2013 that made the same allegations as some of those made earlier in Phillips & Cohen's qui tam lawsuit.

The Adventist settlement is the largest healthcare fraud settlement ever made involving physician referrals to hospitals. It is nearly twice the previous largest settlement involving hospital kickback allegations, which was North Broward Hospital District's recent $69.5 million settlement.

It was alleged Adventist's hospitals paid doctors outrageous sums and offered overly generous benefits and lax billing oversight as part of a corporate strategy to capture and control physician referrals for inpatient and outpatient services near its hospitals. Federal law prohibits hospitals from paying doctors directly or indirectly for referrals so that doctors make recommendations for care based on what's best for the patient – not what's best for the doctor's bank account.

A substantial portion of the settlement amount is based on allegations involving Florida Hospital Medical Group, an Adventist-owned physician practice in Florida whose doctors worked at several Adventist hospitals and dozens of Adventist-owned outpatient clinics. Those hospitals include Florida Hospital Altamonte, Florida Hospital Apopka, Florida Hospital Celebration Health, Florida Hospital Kissimmee, Florida Hospital Orlando, Florida Hospital Waterman (Tavares, Fla.), Florida Hospital for Children (Orlando, Fla.) and Winter Park Memorial Hospital.

The three whistleblowers were longtime employees at Adventist's Park Ridge Health in Hendersonville, NC, where they became aware of the alleged system-wide kickback scheme. Michael Payne was a risk manager and Melissa Church was the executive director of physician services at Park Ridge. Gloria Pryor was a compliance officer for physician offices at Park Ridge.

$13 Million Health Care Fraud Scheme

Doctor at a Brooklyn, New York, clinic was sentenced to two years in prison for his role in a $13 million health care fraud scheme.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Kelly T. Currie of the Eastern District of New York, Special Agent in Charge Scott Lampert of the U.S. Department of Health of Human Services-Office of Inspector General New York Region and Assistant Director in Charge Diego G. Rodriguez of the FBI’s New York Field Office made the announcement.

Okon Umana, 68, of West Haven, Connecticut, pleaded guilty on Dec. 1, 2014, to conspiracy to commit health care fraud.  In addition to imposing the prison term, U.S. District Judge John Gleeson of the Eastern District of New York ordered Umana to pay $6,429,330 in restitution and to forfeit $6,550,036.

From 2009 to 2012, Umana was the medical director of Cropsey Medical Care PLLC , a health care clinic.  In connection with his guilty plea, Umana admitted that many of Cropsey’s medical services were provided by a physician’s assistant who was acting without supervision by a medical doctor, and that Cropsey nevertheless billed Medicare and Medicaid for the services using Umana’s provider number.  In addition, Umana admitted that in seeking reimbursement for costs purportedly incurred transporting certain beneficiaries to and from Cropsey by ambulance, he falsely certified that transportation by ambulette was medically necessary.

Between November 2009 and October 2012, Cropsey submitted more than $13 million in claims to Medicare and Medicaid for a wide variety of fraudulent medical services and procedures, including physician office visits, physical therapy and diagnostic tests.  Medicare and Medicaid reimbursed Cropsey more than $6 million for the claimed services and procedures.

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.”

 

Health Diagnostics Lab To Pay $47 Million in False Claims Settlement

 

 

Cardiovascular testing disease laboratories Health Diagnostics Laboratory Inc. (HDL), of Richmond, Virginia, and Singulex Inc., of Alameda, California, have agreed to resolve allegations that they violated the False Claims Act by paying off physicians in exchange for patient referrals and billing federal health care programs for medically unnecessary testing, the Department of Justice announced today.

Under the settlements, which stem from three related whistleblower actions filed under the federal False Claims Act, HDL will pay $47 million and Singulex will pay $1.5 million.  The government also intervened in the lawsuits as to similar allegations against another laboratory, Berkeley HeartLab Inc.; a marketing company, BlueWave Healthcare Consultants Inc., and its owners, Floyd Calhoun Dent and J. Bradley Johnson; and former CEO Latonya Mallory of HDL.

As alleged in the lawsuits, HDL, Singulex and Berkeley induced physicians to refer patients to them for blood tests by paying them processing and handling fees of between $10 and $17 per referral and by routinely waiving patient co-pays and deductibles.  In addition, HDL and Singulex allegedly conspired with BlueWave to offer these inducements on behalf of HDL and Singulex.  As a result, physicians allegedly referred patients to HDL, Singulex and Berkeley for medically unnecessary tests, which were then billed to federal health care programs.

 

The lawsuits were filed by Dr. Michael Mayes, Scarlett Lutz, Kayla Webster and Chris Reidel under the qui tam, or whistleblower, 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 whistleblowers’ share of the settlements has yet to be determined.  The act also permits the United States to intervene in and take over a whistleblower suit, as it has done in part in the three actions.  The United States advised the court that it would be filing its own complaint against the corporate and individual defendants against whom it has intervened within 120 days.

Cardiac Monitoring Company to Pay $6.4 Million Thanks to the False Claim Act

BioTelemetry Inc., a heart monitoring company headquartered in Malvern, Pennsylvania, has agreed to pay $6.4 million to resolve allegations made under the False Claims Act that its subsidiary, CardioNet, overbilled Medicare and other federal health programs for Mobile Cardiac Outpatient Telemetry services when those services were not reasonable or medically necessary.

“Billing for a higher-level service that is not necessary to treat a patient’s condition to receive higher reimbursement from federal health care programs will not be tolerated,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “Such conduct wastes critical federal health care program funds and drives up the costs of health care for all of us.”

 “This settlement should send a message to all providers: do not misuse federal billing systems to improperly gouge the healthcare system upon which so many Americans rely.”

An MCOT monitor provides real-time, outpatient cardiac monitoring.  MCOT monitors are worn by patients for a period of time during which the device continuously records the activities of the patient’s heart, including any irregular rhythms or other cardiac event, and transmits data to CardioNet’s diagnostic center using cell phone technology.  Traditional, less expensive event monitors only download patient data periodically over a landline.

The government alleges that CardioNet was aware that MCOT services were not eligible for Medicare reimbursement when provided to patients who had experienced only mild or moderate heart palpitations, since less expensive monitors could effectively collect data about those patients’ conditions.  Nonetheless, CardioNet allegedly submitted claims to Medicare for those patients containing the billing code for the more expensive MCOT services along with an inaccurate diagnostic code that misrepresented the true condition of the patients and their need for MCOT services.

“Federal employees deserve health care providers, including remote monitoring companies, that meet the highest standards of ethical and professional behavior,” said Inspector General Patrick E. McFarland of the U.S. Office of Personnel Management.  “Today's settlement reminds all providers that they must observe those standards, and reflects the commitment of federal law enforcement organizations to pursue improper and illegal billings that increase the cost of medical care.”

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.

  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $23.8 billion through False Claims Act cases, with more than $15.2 billion of that amount recovered in cases involving fraud against federal health care programs.

Botox and Children Not A Good Combination. Allergan to Pay More Than $600 Million

A federal court jury in Vermont returned a $6.5 million verdict in favor of the parents of a 6-year-old boy with cerebral palsy who suffered seizures after receiving off-label Botox treatment for his mild muscle spasticity. The jury determined that the defendant, Allergan Inc., negligently promoted the off-label use of Botox to treat muscle spasticity in children at unsafe high doses and failed to sufficiently provide the little boy’s parents and his health care providers with information about the drug’s known risks and dangers, such as seizures, side effects and harmful immune responses.

The jury did find, however, that Allergan had not violated the Vermont Consumer Fraud Act by deceptively promoting Botox for its off-label use in children with muscle spasticity. The jury awarded the Drakes $2.5 million in compensatory damages and $4 million in punitive damages. The trial strategy for the plaintiffs was to put the CEO of Allergan and the company’s ethics on trial in this case.

The parents filed suit in 2013 against the pharmaceutical company after their son, who had mild spasticity in his legs, began having seizure-like episodes requiring hospitalization after a Vermont doctor injected him with Botox. The Drakes said: Prior to his Botox injections, J.D. could walk, feed himself, brush his teeth and speak. He had no history of seizures.

Dr. Scott Benjamin injected almost 7 u/kg of Botox into the boy’s calves in April 2010. Two days after the injections, the child’s complained of pain and his walking became more and more unstable. The doctor injected him again in May with almost twice as much Botox. The next day, the boy began vomiting and had trouble breathing and speaking, in addition to having seizure-like symptoms. He was rushed to the emergency room and diagnosed with an allergic reaction to Botox.

Since then, the boy has continued to have seizures and has developed a chronic, life-threatening immune response. The maximum safe dose for Botox, which has never been approved by the U.S. Food and Drug Administration to treat pediatric spasticity, is 8 u/kg. The FDA denied to approve the drug for that indication because Allergan couldn’t show it was effective at safe doses.

Allergan has continued to promote the off-label use of Botox to treat children. The majority of Botox sales are for off-label indications. It was alleged in the complaint:

The FDA made clear to Allergan in 2009 that it was free to warn physicians about the maximum safe dose for children, but to date Allergan has failed to make that information public. Instead of warning, Allergan continues to sponsor ‘medical education’ activities and dosing schedules that encourage physicians to use unsafe doses higher than 8 u/kg.

Allergan pled guilty to off-label promotion of, among other indications, pediatric spasticity, and agreed to pay $600 million in civil and criminal penalties to the United States government in 2010. Allergan never disclosed information about side effects or seizures in warnings, promotional or marketing materials. Instead, it had a corporate plan to illegally promote the off-label use of Botox by physicians. In addition to promoting Botox at doctors’ conferences, Allergan established and funded two organizations for the express purpose of promoting off-label use of Botox. Allergan has publicly stated that Botox is a miracle drug and has often compared it to penicillin. Side effects are rarely mentioned and consistently understated.