$4 Million Medicare Fraud Scheme Medical Supply Company in LA

A federal jury in Los Angeles convicted a Los Angeles man and owner of a medical supply company today for his role in a $4 million Medicare fraud scheme. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Eileen M. Decker of the Central District of California, Special Agent in Charge Christian J. Schrank of the U.S. Department of Health and Human Services-Office of Inspector Generals  Los Angeles Region and Assistant Director in Charge David L. Bowdich of the FBI’s Los Angeles Field Office made the announcement.

According to evidence presented at trial, Valery Bogomolny, 43, used his company, Royal Medical Supply, to bill Medicare $4 million between January 2006 and October 2009 for power wheelchairs, back braces and knee braces that were medically unnecessary, not provided to beneficiaries or both.  The evidence further showed that Bogomolny created false documentation to support his false billing claims, including creating fake reports of home assessments that never occurred.  Bogomolny personally delivered PWCs to beneficiaries who were able to walk without assistance and signed documents stating that he had delivered equipment when the equipment was not actually delivered.  Bogomolny ultimately received $2.7 million from Medicare on these false claims.

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.

 

Lumber Liquidators Guilty Plea Costs Them $13 Million

According to the Department of Justice-Virginia-based hardwood flooring retailer Lumber Liquidators Inc. pleaded guilty today in federal court in Norfolk, Virginia, to environmental crimes related to its illegal importation of hardwood flooring, much of which was manufactured in China from timber that had been illegally logged in far eastern Russia, in the habitat of the last remaining Siberian tigers and Amur leopards in the world, announced the Department of Justice.

Lumber Liquidators was charged earlier this month in the Eastern District of Virginia with one felony count of importing goods through false statements and four misdemeanor violations of the Lacey Act, which makes it a crime to import timber that was taken in violation of the laws of a foreign country and to transport falsely-labeled timber across international borders into the United States.  The charges describe Lumber Liquidators’ use of timber that was illegally logged in Far East Russia.  This is the first felony conviction related to the import or use of illegal timber and the largest criminal fine ever under the Lacey Act.

“Lumber Liquidators’ race to profit resulted in the plundering of forests and wildlife habitat that, if continued, could spell the end of the Siberian tiger,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division.  “Lumber Liquidators knew it had a duty to follow the law, and instead it flouted the letter and spirit of the Lacey Act, ignoring its own red flags that its products likely came from illegally harvested timber, all at the expense of law abiding competitors. Under this plea agreement, Lumber Liquidators will pay a multi-million dollar penalty, forfeit millions in assets, and must adhere to a rigorous compliance program.  We hope this sends a strong message that we will not tolerate such abuses of U.S. laws that protect and preserve the world’s endangered plant and animal species.”

According to a joint statement of facts filed with the court, from 2010 to 2013, Lumber Liquidators repeatedly failed to follow its own internal procedures and failed to take action on self-identified “red flags.”  Those red flags included imports from high risk countries, imports of high risk species, imports from suppliers who were unable to provide documentation of legal harvest and imports from suppliers who provided false information about their products.  Despite internal warnings of risk and non-compliance, very little changed at Lumber Liquidators.

On other occasions, Lumber Liquidators falsely reported the species or harvest country of timber when it was imported into the United States.  In 2013, Lumber Liquidators imported Mongolian oak from Far East Russia which it declared to be Welsh oak and imported merpauh from Myanmar which it declared to be mahogany from Indonesia. 

The illegal cutting of Mongolian oak in far eastern Russia is of particular concern because those forests are home to the last 450 wild Siberian tigers, Panthera tigris altaica.  Illegal logging is considered the primary risk to the tigers’ survival, because they are dependent on intact forests for hunting and because Mongolian oak acorns are a chief food source for the tigers’ prey species.  Mongolian oak forests are also home to the highly endangered Amur leopard Panthera pardus orientalis, of which fewer than 50 remain in the wild.  In June 2014, in response to illegal logging and the decline in tiger populations, Mongolian oak was added to the Convention on the International Trade in Endangered Species.

Under the plea agreement, Lumber Liquidators will pay $13.15 million, including $7.8 million in criminal fines, $969,175 in criminal forfeiture and more than $1.23 million in community service payments.  Lumber Liquidators has also agreed to a five year term of organizational probation and mandatory implementation of a government-approved environmental compliance plan and independent audits.  In addition, the company will pay more than $3.15 million in cash through a related civil forfeiture.  The more than $13.15 million dollar penalty is the largest financial penalty for timber trafficking under the Lacey Act and one of the largest Lacey Act penalties ever.  The company is scheduled to be sentenced on Feb. 1, 2016.

 

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.

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.   

 

Medtronic Infuse Bone Graft Class Action Lawsuit

Medtronic Inc., the nation’s largest medical device maker, is facing over 1,000 Infuse Bone Graft lawsuits that accuse the manufacturer of intentionally concealing dangerous side effects. These spinal surgery patients claim they suffered serious Infuse Bone Graft problems, including male sterility and other genital injuries, nerve damage, excessive bone growth, chronic pain, and difficulty breathing, swallowing, and speaking. These patients further accuse Medtronic of marketing the Infuse Bone Graft for off-label uses, putting thousands of spine surgery patients at risk for dangerous complications.

Class action lawsuit attorneys are currently looking for patients who were injured after undergoing back surgery with an Infuse Bone Graft. These patients can receive a free legal review using the form on this page and determine if they’re eligible to pursue compensation for their injuries, medical expenses, pain and suffering, and more.

  

Medtronic’s promotion of off-label uses for the Infuse Bone Graft has led to two whistleblower lawsuits and a $40 million settlement with the U.S. Department of Justice in 2006. In addition, Medtronic recently agreed to an $85 million settlement with shareholders who filed a lawsuit over the drop in stock prices related to the DOJ’s investigation.

In 2012, the Senate Finance Committee announced the results of its year-long investigation into allegations Medtronic used false advertising and kickbacks to increase sales of their products. The study revealed that Medtronic paid more than $200 million in consulting fees to authors who were supposed to be studying the efficacy of Infuse.

Hundreds of Infuse Bone Graft lawsuits have been filed in state and federal courts by plaintiffs who allege they suffered serious Infuse Bone Graft complications.

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.

Biomax Pharmacy Guilty of Medicare Fraud

According to the Department of Justice

 

A Miami-area pharmacy owner pleaded guilty today to submitting almost $1.6 million in fraudulent claims to Medicare.

Tamara Esponda, 47, of Miami, pleaded guilty before U.S. District Judge James I. Cohn of the Southern District of Florida to one count of health care fraud.  Sentencing has been scheduled for Nov. 13, 2015.

Esponda owned Biomax Pharmacy Inc.  In connection with her guilty plea, Esponda admitted that, between October 2012 and September 2013, Biomax Pharmacy submitted almost $1.6 million in fraudulent claims to Medicare for prescription drugs that were not prescribed by physicians, not medically necessary, not purchased by Biomax Pharmacy and not provided to Medicare beneficiaries.  Medicare paid 100 percent of the claims.

According to Esponda’s admissions, she and her accomplices stole or illegally paid for unique identifying information of Medicare beneficiaries, and used this information to submit the fraudulent claims.  Esponda also admitted that she controlled Biomax Pharmacy’s bank accounts, and that she transferred the payments received from Medicare to herself and her accomplices.

This 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.  This case is being prosecuted by Trial Attorney Timothy P. Loper 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 U.S. Department of Health and Human Services (HHS) Centers for Medicare & Medicaid Services, working in conjunction with the HHS-Office of Inspector General, are taking steps to increase accountability and decrease the presence of fraudulent providers.

NuVasive Inc. To Pay $13.5 Million For False Claim Settlement

California-based medical device manufacturer NuVasive Inc. has agreed to pay the United States $13.5 million to resolve allegations that the company caused health care providers to submit false claims to Medicare and other federal health care programs for spine surgeries by marketing the company’s CoRoent System for surgical uses that were not approved by the U.S. Food and Drug Administration (FDA), the Justice Department announced today.  The settlement further resolves allegations that NuVasive caused false claims by paying kickbacks to induce physicians to use the company’s CoRoent System.    

 

The United States alleged that between 2008 and 2013, NuVasive promoted the use of the CoRoent System for surgical uses that were not approved or cleared by the FDA, including for use in treating two complex spine deformities, severe scoliosis and severe spondylolisthesis.  As a result of this conduct, the United States alleged that NuVasive caused physicians and hospitals to submit false claims to federal health care programs for certain spine surgeries that were not eligible for reimbursement.       

 

The settlement agreement also resolves allegations that NuVasive knowingly offered and paid illegal remuneration to certain physicians to induce them to use the CoRoent System in spine fusion surgeries, in violation of the federal Anti-Kickback Statute.  The illegal remuneration consisted of promotional speaker fees, honoraria and expenses relating to physicians’ attendance at events sponsored by a group known as the Society of Lateral Access Surgery (SOLAS).  SOLAS was allegedly created, funded and operated solely by NuVasive, despite its outward appearance of independence.      

 

“Health care providers need to be free to make medical decisions without improper influence by material or incentives from manufacturers,” said U.S. Attorney Rod J. Rosenstein of the District of Maryland.  “A medical device manufacturer violates the law if it knowingly causes physicians to use its products for purposes that are not medically reasonable and necessary and to bill federal health insurance programs.”

 

The civil settlement resolves a lawsuit filed under the whistleblower provision of the False Claims Act by Kevin Ryan, a former NuVasive sales representative.  The act permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery.  As part of today’s resolution, Mr. Ryan will receive approximately $2.2 million.

 

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 $24.8 billion through False Claims Act cases, with more than $15.9 billion of that amount recovered in cases involving fraud against federal health care programs.

The settlement with NuVasive was the result of a coordinated effort among the U.S. Attorney’s Office of the District of Maryland, the Civil Division’s Commercial Litigation Branch and the National Association of Medicaid Fraud Control Units.  This matter was investigated by HHS-OIG, the Department of Defense’s Office of the Inspector General and the Office of Personnel Management’s Office of Inspector General, with assistance from the FDA’s Office of Chief Counsel and Office of Criminal Investigations. 

 

This information was brought to us by the US Dept. of Justice

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.

Las Vegas Ponzi Scheme Uncovered

The president and chief executive officer and two former Asia-based executives of a Las Vegas investment company were indicted today for their roles in an alleged $1.5 billion Ponzi scheme. 

“The defendants allegedly preyed on thousands of unsuspecting Japanese victims to enrich themselves by operating a billion-plus dollar Ponzi scheme,” said Assistant Attorney General Caldwell.  “This prosecution shows that the Criminal Division will pursue not only those who victimize American citizens, but also those who use the U.S. as a home base to defraud victims abroad.”

“Investment fraud and other financial fraud cases are a high priority for the U.S. Attorney’s Office in Nevada,” said U.S. Attorney Bogden.  “These defendants are accused of using a Nevada corporation to conduct their $1.5 billion fraud scheme and falsely telling thousands of overseas victims that their investments would be safely held and managed by an independent, third-party escrow agent in Nevada.  Fraudulent ruses and schemes perpetrated by Nevadans using Nevada corporations and entities will continue to be addressed by this office.”

Edwin Fujinaga, 68, of Las Vegas; Junzo Suzuki, 66, of Tokyo; and Paul Suzuki, 36, of Tokyo, were charged in an indictment with eight counts of mail fraud and nine counts of wire fraud.  Fujinaga also is charged with three counts of money laundering.  The indictment seeks from all three defendants forfeiture of the proceeds from the alleged crimes. 

 

Fujinaga was the president and CEO of Las Vegas-based MRI International Inc. (MRI).  Junzo Suzuki previously was MRI’s executive vice president for Asia Pacific, and Paul Suzuki previously was the company’s general manager for Japan operations.  MRI purportedly specialized in “factoring,” whereby the company purchased accounts receivable from medical providers at a discount, and then attempted to recover the entire amount, or at least more than the discounted amount, from the debtor.

 

According to allegations in the indictment, from at least 2009 to 2013, Fujinaga and the Suzukis fraudulently solicited investments from thousands of Japanese residents, and MRI currently owes investors over $1.5 billion.  Specifically, the indictment alleges that Fujinaga and the Suzukis promised investors a series of interest payments that would accrue over the life of the investment and that would be paid out along with the face value of the investment at the conclusion of the investments’ duration.  The defendants allegedly solicited investments by, among other things, promising investors that their investments would be used only for the purchase of medical accounts receivable (MARS) and by representing that investors funds would be managed and safeguarded by an independent third-party escrow company.

 

The indictment further alleges that MRI operated as a Ponzi scheme, wherein the defendants used new investors’ money to pay prior investors’ maturing investments.  According to the indictment, the defendants also allegedly used investors’ funds for purposes other than the purchase of MARS, including paying themselves sales commissions, subsidizing gambling habits, funding personal travel by private jet, and other personal expenses.

 

 

Pfizer Agrees to $325 Million Settlement for Fraudulant Marketing of Neurontin

Pfizer Inc. and Warner-Lambert Co. LLC have agreed to pay $325 million in settlement of a lawsuit brought by a class of third-party payers. It was alleged that the drug Neurontin had been fraudulently marketed by Pfizer and Warner-Lambert. All of the claims brought by class members arising out of the sale and marketing of Neurontin will be resolved. The Plaintiffs’ motion for preliminary approval of the settlement came just more than a month after Pfizer agreed to settle the remaining claims for attorneys’ fees in Kaiser Foundation Health Plan Inc.’s suit against the drug manufacturer in the multidistrict litigation (MDL).
The class Plaintiffs, which include Harden Manufacturing Corp., Louisiana Blue Cross/Blue Shield and others, were ready to bring the litigation to an end. The members of the class Plaintiffs’ steering committee (PSC) wrote in a memorandum in support of the settlement:
This settlement, which provides significant and long-awaited benefits to class members, exceeds the standard for preliminary approval of a class action settlement.
The settlement came less than a month after Pfizer agreed to settle another suit in the MDL. Pfizer agreed in that settlement to pay Kaiser, a health maintenance organization, an undisclosed amount of attorneys’ fees. Since 2004, payers of Neurontin have accused the Defendants in several suits of fraudulently marketing the drug and causing them economic harm. Those suits were ultimately centralized before the United States District Court for the District of Massachusetts for MDL proceedings.
In the newly settled suit, class Plaintiffs alleged a fraudulent scheme to market and sell Neurontin for a variety of uses not approved by the U.S. Food and Drug Administration (FDA). The defendants sought to market the drug for several off-label uses in a variety of ways, including through false or misleading statements to physicians, according to the suit. The third-party payers involved in the action include insurance companies, health care benefit providers, union health and welfare plans and others. The class Plaintiffs have sought preliminary approval of the settlement and certification of the class for settlement purposes. They have asked for date for a final approval hearing.

Merck Fraudulently Promoted Pink Eye Medicine Costs Them $5.9 Million

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.

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.

 

International Fraud Uncovered!

INTERNATIONAL FRAUD DISCOVERED!

24-count indictment has been unsealed today charging four corporations and five individuals with facilitating the illegal export of high-tech microelectronics, uninterruptible power supplies and other commodities to Iran in violation of the International Emergency Economic Powers Act (IEEPA). 

The announcement was made by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Kenneth Magidson of the Southern District of Texas, Assistant Director Randall Coleman of the FBI’s Counterintelligence Division, Special Agent in Charge Perrye K. Turner of the FBI’s Houston Field Office, Under Secretary of Commerce Eric L. Hirschhorn of the Department of Commerce, Special Agent in Charge Tracy E. Martin of the Department of Commerce’s Office of Export Enforcement’s Dallas Field Office and Special Agent in Charge Lucy Cruz of the IRS’ Houston Field Office. 

“The Office of Export Enforcement and our law enforcement partners will continue to investigate, pursue and dismantle these procurement networks that violate U.S. export control laws whether they operate within our borders or anywhere else in the world,” said Special Agent in Charge Martin.

The indictment alleges Houston-based company Smart Power Systems Inc. (SPS); Bahram Mechanic, 69, and Tooraj Faridi, 46, both of Houston; and Khosrow Afghahi, 71, of Los Angeles, were all members of an Iranian procurement network operating in the United States.  Also charged as part of the scheme are Arthur Shyu, and the Hosoda Taiwan Limited Corporation in Taiwan; Matin Sadeghi, 54, and Golsad Istanbul Trading Ltd. in Turkey; and the Faratel Corporation, co-owned by Mechanic and Afghahi in Iran.

 

According to the indictment, Mechanic and Afghahi are the co-owners of Iran-based Faratel and its Houston-based sister company SPS.  Faratel designs and builds uninterruptible power supplies for various Iranian entities, including Iranian government agencies such as the Iranian Ministry of Defense, the Atomic Energy Organization of Iran, and the Iranian Centrifuge Technology Company.  SPS designs and manufactures uninterruptible power supplies in cooperation with Faratel.  Faridi currently serves as a vice president of SPS.  Shyu is a senior manager at the Hosoda Tawain Limited Corporation, a trading company located in Taiwan, while Sadeghi is an employee of Golsad Istanbul Trading, a shipping company located in Turkey.

The indictment alleges that between approximately July 2010 and the present, Mechanic and the others engaged in a conspiracy to obtain various commodities, including controlled United States-origin microelectronics.  They then allegedly exported these to Iran, while carefully evading the government licensing system set up to control such exports.  The microelectronics shipped to Iran allegedly included microcontrollers and digital signal processors.  According to the indictment, these commodities have various applications and are frequently used in a wide range of military systems, including surface-air and cruise missiles.  Between July 2010 and the present, Mechanic’s network allegedly sent at least $24 million worth of commodities to Iran.

According to court documents, Mechanic, assisted by Afghahi and Faridi, regularly received lists of commodities, including United States-origin microelectronics, sought by Faratel in Iran.  Mechanic would approve these orders and then send the orders to Shyu in Taiwan, according to the indictment.  Shyu would allegedly purchase the commodities utilizing Hosoda Taiwan Limited and then ship the commodities to Turkey, where Sadeghi would act as a false buyer via his company, Golsad Istanbul Trading Ltd.  The indictment further alleges that Sadeghi would receive the commodities from Shyu and then ship them to Faratel in Iran.  Mechanic required his co-conspirators to notify him and obtain his approval for each of the transactions completed by the network, according to the allegations.

The individual defendants each face up to 20 years in federal prison, while the corporate defendants face fines of up to $1 million for each of the IEEPA counts, upon conviction.

Mechanic, Afghahi and Shyu are also charged with conspiring to commit money laundering and substantive money laundering violations, each charge carries a maximum potential term of imprisonment of 20 years.  Mechanic further faces a charge of willful failure to file foreign bank and financial accounts for which he faces up to five years in federal prison.  The charges also carry the possibility of substantial fines upon conviction.

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.