Hospitals Pay United States $250 + Million to Resolve False Claims Act Allegations Related to Implantation of Cardiac Devices

The Department of Justice has reached 70 settlements involving 457 hospitals in 43 states for more than $250 million related to cardiac devices that were implanted in Medicare patients in violation of Medicare coverage requirements, the Department of Justice announced.

An implantable cardioverter defibrillator, or ICD, is an electronic device that is implanted near and connected to the heart.  It detects and treats chaotic, extremely fast, life-threatening heart rhythms, by delivering a shock to the heart, restoring the heart’s normal rhythm.  Only patients with certain clinical characteristics and risk factors qualify for an ICD covered by Medicare. 

Medicare coverage for the device, which costs approximately $25,000, is governed by a National Coverage Determination.  The Centers for Medicare and Medicaid Services implemented the NCD based on clinical trials and the guidance and testimony of cardiologists and other health care providers, professional cardiology societies, cardiac device manufacturers and patient advocates.  The NCD provides that ICDs generally should not be implanted in patients who have recently suffered a heart attack or recently had heart bypass surgery or angioplasty.  The medical purpose of a waiting period -40 days for a heart attack and 90 days for bypass/angioplasty - is to give the heart an opportunity to improve function on its own to the point that an ICD may not be necessary.  The NCD expressly prohibits implantation of ICDs during these waiting periods, with certain exceptions.  The Department of Justice alleged that from 2003 to 2010, each of the settling hospitals implanted ICDs during the periods prohibited by the NCD.  

  Most of the settling defendants were named in a qui tam, or whistleblower, lawsuit brought under the False Claims Act, which permits private citizens to bring lawsuits on behalf of the United States and receive a portion of the proceeds of any settlement or judgment awarded against a defendant.  The lawsuit was filed in federal district court in the Southern District of Florida by Leatrice Ford Richards, a cardiac nurse, and Thomas Schuhmann, a health care reimbursement consultant.  The whistleblowers have received more than $38 million from the settlements.  The Department of Justice is continuing to investigate additional hospitals and health systems.

 

Tuomey Healthcare Settles Violations for $237 Million

The Department of Justice announced that it has resolved a $237 million judgment against Tuomey Healthcare System for illegally billing the Medicare program for services referred by physicians with whom the hospital had improper financial relationships.  Under the terms of the settlement agreement, the United States will receive $72.4 million and Tuomey, based in Sumter, South Carolina, will be sold to Palmetto Health, a multi-hospital healthcare system based in Columbia, South Carolina.

The judgment against Tuomey related to violations of the Stark Law, a statute that prohibits hospitals from billing Medicare for certain services (including inpatient and outpatient hospital care) that have been referred by physicians with whom the hospital has an improper financial relationship.  The Stark Law includes exceptions for many common hospital-physician arrangements, but generally requires that any payments that a hospital makes to a referring physician be at fair market value for the physician’s actual services, and not take into account the volume or value of the physician’s referrals to the hospital.

The government argued in this case that Tuomey, fearing that it could lose lucrative outpatient procedure referrals to a new freestanding surgery center, entered into contracts with 19 specialist physicians that required the physicians to refer their outpatient procedures to Tuomey and, in exchange, paid them compensation that far exceeded fair market value and included part of the money Tuomey received from Medicare for the referred procedures.  The government argued that Tuomey ignored and suppressed warnings from one of its attorneys that the physician contracts were “risky” and raised “red flags.”

On May 8, 2013, after a month-long trial, a South Carolina jury determined that the contracts violated the Stark Law.  The jury also concluded that Tuomey had filed more than 21,000 false claims with Medicare.  On Oct. 2, 2013, the trial court entered a judgment under the False Claims Act in favor of the United States for more than $237 million.  The United States Court of Appeals for the Fourth Circuit affirmed the judgment on July 2, 2015. 

The case came from a lawsuit filed on Oct. 4, 2005, by Dr. Michael K. Drakeford, an orthopedic surgeon who was offered, but refused to sign, one of the illegal contracts.  The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.  The act allows the government to intervene and take over the action, as it did in this case.  Dr. Drakeford will receive approximately $18.1 million under the settlement.

As part of the settlement, Tuomey will be required to retain an independent review organization to monitor any arrangements it makes with physicians or other sources of referrals for the duration of the five-year Corporate Integrity Agreement.

PharMerica Corp. to Pay $9.25 Million for Depakote Kickback

According to the Department of Justice the nation’s second-largest nursing home pharmacy, PharMerica Corp., has agreed to pay $9.25 million to resolve allegations that it solicited and received kickbacks from pharmaceutical manufacturer Abbott Laboratories in exchange for promoting the prescription drug Depakote for nursing home patients.  PharMerica is headquartered in Louisville, Kentucky.

“Elderly nursing home residents suffering from dementia have little control over the medications they receive and depend on the unbiased judgment of healthcare professionals for their daily care,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Kickbacks to entities making drug recommendations compromise their independence and undermine their role in protecting nursing home residents from the use of unnecessary drugs.”

Nursing homes rely on consultant pharmacists, such as those employed by PharMerica, to review their residents’ medical charts at least monthly and make recommendations to their physicians about what drugs should be prescribed for those residents.  The settlement announced today resolves allegations that in exchange for recommending that physicians prescribe Depakote, an anti-epileptic drug manufactured by Abbott, to nursing home residents, PharMerica solicited and received kickbacks from Abbott.  The government alleges that the kickbacks were disguised as rebates, educational grants and other financial support.

In May 2012, the United States, numerous individual states and Abbott entered into a $1.5 billion global civil and criminal resolution that, among other things, resolved Abbott’s liability under the False Claims Act for alleged kickbacks to nursing home pharmacies, including PharMerica.  The settlement announced today resolves PharMerica’s role in that alleged kickback scheme.

Approximately $6.75 million of the settlement will go to the United States, while $2.5 million has been allocated to cover Medicaid program claims by states that elect to participate in the settlement.  The Medicaid program is jointly funded by the federal and state governments.

“Nursing home pharmacies accepting kickbacks from drug makers in exchange for prescribing certain prescription drugs puts vulnerable residents at risk for receiving unnecessary medications, corrupts medical decision making, and inflates health care costs,” said Special Agent in Charge Nick DiGiulio of the U.S. Department of Health and Human Services’ Office of Inspector General (HHS-OIG).  “Our agency will continue to root out such corrosive practices from our health care system.”

The settlement partially resolves allegations in two lawsuits filed in federal court in the Western District of Virginia by Richard Spetter and Meredith McCoyd, former Abbott employees.  The lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.  The act also allows the government to intervene and take over the action, as it did in part in this case.  As part of today’s resolution, Ms. McCoyd will receive $1 million from the federal share of the settlement amount.

Serenity Hospice and Pallative Care Guilty of Hospice-Medicare Fraud

According to the Phoenix Sun, a Phoenix hospice provider will pay $2.2 Million to the federal government for falsely billing Medicare for hospice care. 

Under the agreed terms, the founder and former president Ruth Siegel agreed to be excluded from Medicare, Medicaid and other federal health programs for 5 years. She will also, personally pay $1 Million of the $2.2 Million settlement

This lawsuit was filed by a former employee Cheryl Sifford, under the false claims act. Serenity still denied the allegations, but said it was more cost effective to settle rather than fight it.

 

Here's how the system works, Medicare pays for medical care to manage symptoms and provide relief to those with a life expectancy of less than 6 months and who have decided not to seek any further treatment, but rather prepare for death. The rate Medicare pays for this service is over 4 times the rate that should have been paid for the actual services they received. Thus boosting profits for the facility.

 

Sifford claimed in a civil lawsuit filed, that Serenity flagged patients who were referred by CareMore to ensure they were admitted as hospice patients. In addition she was also instructed to take CareMore's staff to dinner, concerts and limousine rides.

Siegel has not admitted guilt, but has insisted that this settlement is the quickest and most cost effective settlement.

The whistleblower, Cheryl Sifford will collect $440,000 for her help in this case.

If you know of any such thing taking place where you work we encourage you to contact Jim VanderLinden immediately. http://www.vanderlindenlaw.com/

Jury Convicts Houston Psychiatrist in $158 Million Medicare Fraud Scheme

A Houston psychiatrist was convicted late yesterday by a federal jury of participating in a $158 million Medicare fraud scheme involving false claims for mental health treatment.

Sharon Iglehart, 58, of Harris County, Texas, was convicted of one count of conspiracy to commit health care fraud, one count of health care fraud and three counts of making false statements relating to health care matters, following a seven-day jury trial before U.S. District Judge Ewing Werlein Jr. of the Southern District of Texas.  Iglehart is scheduled to be sentenced on Dec. 5, 2015.
According to evidence presented at trial, from 2006 until June 2012, Iglehart and others engaged in a scheme to defraud Medicare by submitting, through Riverside General Hospital (Riverside), approximately $158 million in false and fraudulent claims for partial hospitalization program  services to Medicare.  A PHP is a form of intensive outpatient treatment for severe mental illness.
The evidence presented at trial showed that the Medicare beneficiaries for whom Riverside billed Medicare did not receive PHP services.  In fact, according to evidence presented at trial, most of the Medicare beneficiaries for whom Riverside billed Medicare rarely saw a psychiatrist and did not receive intensive psychiatric treatment.
In addition, evidence presented at trial showed that Iglehart personally billed Medicare for individual psychotherapy and other treatment to patients at Riverside locations – treatment that she never provided.  The evidence at trial also demonstrated that Iglehart falsified the medical records of patients at Riverside’s inpatient facility to make it appear as if she provided psychiatric treatment when, in fact, she did not.

Columbus Regional Healthcare System and Physician Ordered to Pay Over $25Million False Claims Violation

Columbus Regional Healthcare System and Dr. Andrew Pippas have agreed to pay more than $25 million to resolve allegations that they violated the False Claims Act by submitting claims in violation of the Stark Law.  Under the settlement agreement, Columbus Regional has agreed to pay $25 million, plus additional contingent payments not to exceed $10 million, for a maximum settlement amount of $35 million, and Pippas has agreed to pay $425,000.

The Stark Law prohibits physician referrals of certain health services for Medicare and Medicaid patients if the physician has a financial relationship with the entity to which he or she refers the patient.  The United States alleged that between 2003 and 2013, Columbus Regional provided excessive salary and directorship payments to Pippas that violated the Stark Law.

The United States also alleged that from May 2006 through May 2013, Columbus Regional submitted claims to federal health care programs for services at higher levels than supported by the documentation, and between 2010 and 2012, they submitted claims to federal health care programs for radiation therapy at higher levels than the therapy that was provided.

 

Of the $25.425 million that Columbus Regional and Pippas have agreed to pay to resolve their respective civil claims, they will pay $24,666,040 to the federal government for federal healthcare program losses and $758,960 to the state of Georgia for the state share of its Medicaid losses. 

Also as part of the settlement, Columbus Regional will enter into a Corporate Integrity Agreement  with the Department of Health and Human Services-Office of the Inspector General that requires Columbus Regional to implement measures designed to avoid or promptly detect future conduct similar to that which gave rise to this settlement.

 

 

Kmart Guilty of False Claims Act Violation

KMART Corp. (Kmart), a discount department store chain that operates approximately 780 in-store pharmacies, has paid the United States $1.4 million to resolve allegations that it violated the False Claims Act by using drug manufacturer coupons and gasoline discounts as improper Medicare beneficiary inducements, the Justice Department announced today. 

 

The settlement resolves allegations that Kmart violated the False Claims Act by providing illegal benefits to beneficiaries of the Medicare program.  The government alleged that from June 2011 to June 2014, Kmart knowingly and improperly influenced the decisions of Medicare beneficiaries to bring their prescriptions to Kmart pharmacies by permitting the Medicare beneficiaries to use drug manufacturer coupons to reduce or eliminate prescription co-pays that they otherwise would be obligated to pay.  Federal law prohibits a person from offering beneficiaries of certain federal health programs, such as Medicare, remuneration that is intended to influence the beneficiary’s choice of provider.  The government alleged that Kmart’s conduct caused the Medicare beneficiaries to seek expensive, brand name drugs in lieu of cheaper generic drugs, which caused the government’s costs to increase without any medical benefit to the beneficiary.  The government also alleged that Kmart improperly encouraged Medicare beneficiaries to bring their prescriptions to Kmart pharmacies by offering them varying levels of discounts on the purchase of gasoline at participating gas stations based on the number of prescriptions that they filled at Kmart pharmacies.

 

The settlement resolves allegations in a lawsuit filed by Joshua Leighr, a former Kmart pharmacist, under the qui tam, or whistleblower provisions of the False Claims Act.  The act authorizes private parties, such as Mr. Leighr, to sue for fraud on behalf of the United States and to share in any recovery.  Mr. Leighr will receive approximately $248,500 of the settlement.   

 

Florida Health Fraud Uncovered

A federal jury in Miami late yesterday convicted the former medical director of, and three therapists employed by this health care provider of conspiracy to commit health care fraud and related charges for their roles in a scheme to fraudulently bill Medicare and Florida Medicaid more than $63 million.

Roger Rousseau, 73, of Miami; Doris Crabtree, 62, of Miami; Angela Salafia, 68, of Miami Beach, Florida; and Liliana Marks, 48, of Homestead, Florida, were found guilty of conspiracy to commit health care fraud.  In addition, Rousseau was convicted of two counts of health care fraud.  Sentencing is scheduled for Nov. 6, 2015, before U.S. District Judge Robert N. Scola Jr. of the Southern District of Florida.

Rousseau was the former medical director of Health Care Solutions Network Inc. (HCSN), a now-closed partial hospitalization program (PHP) that purported to provide intensive treatment for mental illness.  Crabtree, Salafia and Marks were therapists who worked for HCSN.

According to the evidence presented at trial, from approximately 2004 through 2011, HCSN billed Medicare and Medicaid for mental health services that were not medically necessary or never provided, and that HCSN paid kickbacks to assisted living facility owners and operators in Miami who, in exchange, referred beneficiaries to HCSN.

The trial evidence showed that Rousseau routinely signed what he knew to be fabricated and altered medical records without reviewing the substance of the records and, in most instances, without ever meeting with the patients.  The evidence at trial also demonstrated that Crabtree, Salafia and Marks fabricated medical records to support HCSN’s false and fraudulent claims for reimbursement for PHP services.

In total, HCSN submitted approximately $63.7 million in false and fraudulent claims to Medicare and Medicaid.  Medicare and Medicaid paid approximately $28 million on those claims.

In November 2014, following a jury trial, co-defendants Blanca Ruiz and Alina Fonts were convicted of conspiracy to commit health care fraud, and Fonts also was convicted of health care fraud.  In February 2015, both Ruiz and Fonts were sentenced to serve six years in prison.

This information provided on the US Dept. of Justice website

$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.

Missouri Health Care Providers Violate False Claims Act to Pay $5.9 Million

Two Southwest Missouri health care providers have agreed to pay the United States $5.5 million to settle allegations that they violated the False Claims Act by engaging in improper financial relationships with referring physicians, the U.S. Justice Department announced today.  The two providers are Mercy Health Springfield Communities, formerly known as St. John’s Health System Inc., which owns and operates a hospital in Springfield, Missouri, and its affiliate, Mercy Clinic Springfield Communities, formerly known as St. John’s Clinic, which operates health care facilities in southwest Missouri. 

“Financial relationships between heath care providers and their referral sources must be structured to comply with all applicable laws,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, the head of the Justice Department’s Civil Division.  “When physicians are rewarded financially for referring patients to hospitals or other health care providers, it can affect their medical judgment, resulting in overutilization of services that drives up health care costs for everyone.  In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable.”

“This settlement protects patients and the public by enforcing the federal protections against illegal profit incentives for physicians,” said U.S. Attorney Tammy Dickinson of the Western District of Missouri. “A bonus structure that rewards physicians based on the value of their referrals is detrimental to both the quality and the cost of health care. Patients deserve assurances that they are receiving appropriate medical care, unbiased by hidden incentives. And taxpayers deserve assurances that the cost of public health care programs is not inflated by unnecessary procedures and services.”

“Health care organizations paying physicians based on referrals – as alleged in this case – undermines public trust in medical institutions and the financial integrity of federal health care programs,” said Special Agent in Charge Gerald T. Roy of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).  “We will aggressively pursue organizations that engage in conduct detrimental to taxpayers and government health programs.”

The settlement announced today resolved allegations that the defendants submitted false claims to the Medicare program for services rendered to patients referred by physicians who received bonuses based on a formula that improperly took into account the value of the physicians’ referrals of patients to the clinic.  Federal law restricts the financial relationships that hospitals and clinics may have with doctors who refer patients to them.

The allegations settled today arose from a lawsuit filed by a whistleblower, Dr. Jean Moore, a physician who is employed by one of the defendants, 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.  Dr. Moore will receive $825,000 from the recovery announced today.

Evelio Penaranda Owner of Naranja Pharmacy Guilty of Medicare Fraud

A Miami-area pharmacy owner pleaded guilty today for his role in the submission of more than $1.8 million in fraudulent claims to Medicare.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office and Special Agent in Charge Shimon R. Richmond of the U.S. Department of Health and Human Services Office of Inspector General’s Miami Regional Office made the announcement.

Evelio Fernandez Penaranda, 47, of Miami, Florida, pleaded guilty before U.S. Magistrate Judge Chris M. McAliley of the Southern District of Florida to one count of health care fraud.  Sentencing has been scheduled for Oct. 8, 2015.

Penaranda owned Naranja Pharmacy Inc.  In connection with his guilty plea, Penaranda admitted that, between May 2013 and March 2014, Naranja Pharmacy submitted fraudulent claims to Medicare for prescription drugs that were not prescribed by physicians, not medically necessary and not provided to Medicare beneficiaries.  According to admissions made in connection with Penaranda’s guilty plea, Naranja Pharmacy submitted these false claims by obtaining and using the unique identifying information of Medicare beneficiaries and doctors without their consent.

Penaranda admitted that he controlled Naranja Pharmacy’s bank accounts, and that he transferred the payments received from Medicare to himself and his accomplices.  According to admissions made in connection with Penaranda’s plea, during the course of the scheme, Naranja Pharmacy submitted to Medicare over $1.8 million in false claims for prescription drugs, and Medicare paid 100 percent of the claims.

The case is being investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Southern District of Florida.  The case is being prosecuted by Trial Attorney Nicholas E. Surmacz of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged over 2,300 defendants who collectively have billed the Medicare program for over $7 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

AstraZeneca and Cephalon to Pay $46.5 Million and $7.5 Million

AstraZeneca LP has agreed to pay the United States and participating states a total of $46.5 million, plus interest, to resolve allegations that it knowingly underpaid rebates owed under the Medicaid Drug Rebate Program, the Justice Department announced today.  Of that amount, AstraZeneca will pay roughly $26.7 million, plus interest, to the United States, and the remainder to states participating in the settlement.

In a separate settlement arising out of the same case, Cephalon Inc. has agreed to pay the United States and participating states a total of $7.5 million, plus interest, to resolve similar allegations.  Of that amount, Cephalon will pay roughly $4.3 million, plus interest, to the United States, and the remainder to states participating in the settlement.
Pursuant to the Medicaid Drug Rebate Program, drug manufacturers are required to pay quarterly rebates to state Medicaid programs in exchange for Medicaid’s coverage of the manufacturers’ drugs.  The quarterly rebates are based, in part, on the Average Manufacturer Prices (AMPs) that the manufacturers report to the government for each of their covered drugs.  Generally, the higher the reported AMP for a drug, the greater the rebate the manufacturer pays to state Medicaid programs for the drug.  These settlements resolve allegations that AstraZeneca and Cephalon underreported AMPs for a number of their drugs by improperly reducing the reported AMPs for service fees they paid to wholesalers.  As a result, the government contends that AstraZeneca and Cephalon underpaid quarterly rebates owed to the states and caused the United States to be overcharged for its payments to the states for the Medicaid program.
The two settlements partially resolve a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.  The amounts to be received by the whistleblower in this suit, Ronald J. Streck, a pharmacist, have not yet been determined.

Novartis To Pay Billions for Kickback Scheme

The U.S. Department of Justice says that Novartis should pay up to $3.35 billion in damages and civil fines for using kickbacks to boost sales of two drugs that caused federal health care programs to overpay for medicines, according to documents filed in federal court in New York.

 

The feds argue that Novartis violated the False Claims Act by using different plans, including rebates, to induce specialty pharmacies to boost prescriptions for two drugs: the Myfortic treatment for kidney transplants and Exjade, a medicine used for reducing excess iron in patients who undergo blood transfusions.

In its filing, the Justice Department is seeking up to $1.52 billion in damages, which represents triple the amount of money that Medicare and Medicaid paid for the drugs as a result of kickbacks between 2004 and 2013. The feds are also seeking up to $1.83 billion in fines – or $5,500 to $11,000 – for each of more than 166,000 allegedly false claims that were submitted for reimbursement to the health care sales manager.

Two years ago, the Justice Department and about a dozen states joined the litigation and a trial date for the lawsuit brought by the feds is set to begin in November. We should note that the feds also joined a separate whistleblower lawsuit filed by another former Novartis employee. In that suit, court document allege that Novartis paid for lavish trips and that speaker dinners given for doctors were purportedly kickbacks that used to induce them to prescribe Novartis drugs, according to court documents.

In a statement, a Novartis spokeswoman writes us that the document filed by the feds is a pre-trial order,which is a standard procedural step in which all parties submit an overview of their case and a list of the documents and witnesses they plan to utilize at trial. Novartis continues to dispute the allegations and is continuing to defend itself in this litigation.”

Last month, by the way, Express Scripts agreed to pay $60 million to resolve allegations by the feds that one of its business units participated in the kickback scheme. Last year, another specialty pharmacy, BioScrip, agreed to pay $15 million to settle allegations as part of the same litigation.

 

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.

$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.

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.

Adventist Healthcare Admits Guilt For ViolatingFalse Claims Act

Adventist Health System Sunbelt Healthcare Corporation (Adventist) has agreed to pay $5,412,502 to resolve claims that it violated the False Claims Act by providing radiation oncology services to Medicare and TRICARE beneficiaries that were not directly supervised by radiation oncologists or similarly qualified persons, the Department of Justice announced.  Adventist is a non-profit healthcare organization operating a large network of hospitals in the South and the Midwest, and doing business in Florida as Florida Hospital.         

“The settlement demonstrates our continued vigilance to ensure that federal health care beneficiaries receive the highest quality of patient care,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “It is critical that health care providers adequately supervise the services they provide to their patients.”

Radiation oncology services provided to patients served by Medicare and TRICARE, the Department of Defense’s health care program, must be directly supervised by a radiation oncologist or similarly qualified personnel.  The United States alleged that, from Jan. 1, 2010, through Dec. 31, 2013, Adventist violated this supervision requirement for radiation oncology services provided to federal health care program beneficiaries at several Florida locations, including in Altamonte Springs, Daytona Beach, Deland, Kissimmee, Orange City, Orlando, Palm Coast and Winter Park.  These services included radiation simulation, dosimetry, radiation treatment delivery and devices, and intensity-modulated radiation therapy.

“Medicare and TRICARE patients deserve high quality health care,” said U.S. Attorney A. Lee Bentley III of the Middle District of Florida.  “We will not tolerate providers recklessly cutting corners, particularly when furnishing such critical medical services as radiation oncology.”
The settlement partially resolves allegations made in a qui tam lawsuit under the False Claims Act filed in Tampa, Florida, by Dr. Michael Montejo, a radiation oncologist and former employee of Florida Oncology Network P.A., a radiation oncology group.  The act permits private individuals to sue on behalf of the government for false claims and to share in any recovery.  Dr. Montejo will receive $1,082,500 as his share of the recovery. 

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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.

MN Medtronic's Device Untested Yet Still Released! What Do You Do When You Can't Trust Your Dr.?

 

Medical device manufacturer Medtronic Inc. has agreed to pay the United States $2.8 million to resolve allegations under the False Claims Act that Medtronic caused certain physicians to submit false claims to federal health care programs for a medical procedure known as “SubQ stimulation,” the Justice Department announced today.  Medtronic Inc. is a medical technology company based in Minnesota.

“Today’s settlement demonstrates our commitment to ensure that beneficiaries of federal health care plans, including Medicare recipients and military families, receive medical treatments that have been proven safe and effective,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division.  “Targeting chronic pain patients with a medical procedure that lacks evidence of clinical efficacy wastes the country’s health care resources.”

The United States alleged that from 2007 through 2011, Medtronic knowingly caused dozens of physicians located throughout more than 20 states to submit claims to Medicare and TRICARE for investigational medical procedures known as SubQ stimulation that were not reimbursable.  In these procedures, Medtronic’s spinal cord stimulation devices were placed just beneath the skin near an area of pain, most often in the lower back, where the devices could provide electrical impulses to create a “tingling” sensation intended to alleviate chronic pain.  The United States alleged that even though the safety and efficacy of SubQ stimulation had not been established as required by the Food and Drug Administration (FDA), the company promoted this procedure by, among other strategies, arranging to have physician-customers attend Medtronic-sponsored “on-site training programs” regarding the use of Medtronic spinal cord stimulation devices for SubQ stimulation.        

“Patients should be able to trust that their health care providers only use – and bill Medicare for – medical procedures that have been shown to be safe and effective,” said Special Agent in Charge Scott J. Lampert of the Department of Health and Human Services’ Office of Inspector General.  “Our agency will continue to pursue medical device makers that ignore requirements designed to protect patient health and federal health care programs.”

The civil settlement resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery.  The lawsuit was filed by Jason Nickell, who formerly worked as a Medtronic sales representative.  Nickell will receive $602,000. 

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 $23.5 billion through False Claims Act cases, with more than $15 billion of that amount recovered in cases involving fraud against federal health care programs.