St. John’s Health System, headquartered in Tulsa, Oklahoma, has agreed to pay the United States $13,229,348.88 to settle allegations that it submitted claims to Medicare and Medicaid that were tainted by the hospital’s financial relationships with referring physicians.

Federal law prohibits health care providers like St. John’s from billing the federal healthcare program for referrals from doctors with whom the providers have a financial relationship, unless the relationship falls within certain exceptions.  Additionally, the Anti-Kickback Statute prohibits the payment of kickbacks for the referral of services that are paid for under a federal healthcare program.  In this case, St. John’s made payments to twenty-three individual physician or physician groups to induce referrals for medical services.

This case did not arise from a whistleblower.  Instead, this information was discovered in April of 2008 when St. John’s submitted a self-disclosure report to the Department of Health and Human Services Office of Inspector General where they acknowledged that the physician agreements may have run afoul of federal law. 

The Department of Justice press release can be found at:  http://www.justice.gov/opa/pr/2009/December/09-civ-1376.html

The Department of Justice announced that Spectranetics Corporation, a medical device manufacturer, has agreed to pay the United States $4.9 million in civil damages plus a $100,000.00 forfeiture to resolve various claims against the company.  Spectranetics sells certain types of medical lasers and peripheral devices for those lasers.  The claims against Spectranetics arose from allegations that the company engaged in several inappropriate acts from 2003 to 2008, specifically: 

• illegally importing unapproved medical devices and then providing them to physicians for use in patients;
• conducting a clinical study in a manner that failed to comply with applicable federal regulations, and
• promoting certain products for procedures for which Spectranetics had yet to receive FDA approval.

In order to resolve the many serious allegations against it, the company agreed to a civil monetary settlement, and also entered into a non-prosecution agreement to avoid criminal charges by the United States as well as a corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services.  As a part of the non-prosecution agreement, Spectranetics has accepted responsibility for its misconduct and instituted remedial measures to prevent similar conduct in the future.  The civil settlement agreement resolves allegations that Spectranetics caused false and fraudulent claims to be submitted to Medicare throughout the time its improper conduct was ongoing.

Going forward, the company will cooperate with the Department of Justice’s ongoing criminal investigation into related matters.  Spectranetics will also be required to submit records from its clinical investigations to an independent review organization to be audited to ensure compliance with FDA regulations.  The settlement is thus designed to protect the integrity of the Medicare system, the health of patients nationwide, and the interests of all taxpayers.

The Department of Justice’s press release can be found at:  http://www.justice.gov/opa/pr/2009/December/09-civ-1385.html

Wheaton Community Hospital, the City of Wheaton (MN), and Dr. Stanley Gallagher have agreed to pay the United States $846,461.00 to settle allegations that their hospital admission practices violated the False Claims Act.  In particular, the suit against Wheaton Community Hospital, the City, and Dr. Gallagher alleged that they admitted some patients and kept others admitted to acute care when doing so was not medically necessary.  The three defendants then allegedly billed Medicare for the cost of the unnecessary admissions.

The whistleblower who brought the allegations to light formerly practiced at Wheaton Community Hospital with Dr. Gallagher.  As a result of his efforts in exposing the alleged fraud, the whistleblower will receive $203,150.00 of the overall settlement.

The Department of Justice’s press release can be found at: http://www.justice.gov/opa/pr/2010/January/10-civ-001.html

Genesys Health System, a Michigan-based health care service provider, has agreed to pay the United States $669,413.00 to settle allegations that it submitted false claims to Medicare. Specifically, a whistleblower’s qui tam suit alleged that from 2001 through 2007, Genesys repeatedly billed Medicare for higher levels of service than were actually provided to the company’s cardiology patients. For bringing Genesys’s alleged fraud to light, the whistleblower will receive a $133,882.00 share of the settlement.

In light of the rising costs of health care, and in particular the increasing pressure being placed on the Medicare Trust Fund, the federal government is eager to stamp out fraud and abuse aimed at exploiting the Medicare program. As Tony Berg, Assistant Attorney General of the Justice Department’s Civil Division, noted, “this case demonstrates we are committed to vigorously pursuing those who defraud Medicare.”

More information can be found at: http://www.justice.gov/opa/pr/2009/December/09-civ-1384.html