False Claims Act Resource Center

Archive for April, 2011

Fighting Fraud

Monday, April 25th, 2011

Peter Budetti, director of Program Integrity at the Centers for Medicare and Medicaid Services, has focused his attention on fraud prevention, detection, and prosecution.  On average, between $70 billion and $234 billion is lost annually due to healthcare fraud.  Obama’s administration has also committed resources to minimizing fraud.

The number one state for healthcare fraud is Florida, where many elders choose to retire.  The state is swarming with criminals looking to take advantage of Medicare fraud since it is so easy to become a provider under the government healthcare programs.  Learning how to electronically submit claims is fairly easy, and the government computers automatically generate payments.  The fraudsters don’t only include healthcare professionals; it includes drug dealers and organized crimes units as well. 

To aid is the prevention of fraud, healthcare applicants are being screened; the “high risk” applicants will be subjected to background checks and fingerprinting.  The computer programs are being revamped with new software programs which make them less vulnerable.  Hoping to deter people from these scams are tougher federal sentencing guidelines for crimes that involve more than $1 million in losses. 

Although there may be a few skeptics, Max Baucus, Senate Finance Committee Chairman, said their efforts are already paying off.  Last year the government recovered about $4 billion in losses. 

For more information see:  http://www.reuters.com/article/2011/04/13/us-usa-healthcare-fraud-idUSTRE73C2HX20110413

False Billing for Anesthesia Services

Monday, April 25th, 2011

Sutter Hospital, a large hospital chain in Northern California, has had a qui tam lawsuit filed against them for false billing of anesthesia services. It is believed that the fraudulent amount is in the hundreds of million of dollars. Some of the billing codes for the services or supplies that Sutter Hospitals used were previously paid. In some cases, an anesthesiologist was not present or anesthesia was not even used during the procedure. Additionally, the bills were often inflated to higher anesthesia costs. Rockville Recovery Associates Limited was hired by a private insurance company to do independent billing consultation and review bills for fraudulent activity. They discovered Sutter Hospital’s fraudulent scheme and filed the suit against them. Recent reports have shown that Sutter’s fraudulent scheme has resulted in Northern California’s revenue per patient per day being 56% higher than Southern California. Sutter Hospital accounts for over a third of the hospital revenue.

For more information see:  http://www.insurance.ca.gov/0400-news/0100-press-releases/2011/release053-11.cfm

Ambulance Provider Accused of Fraudulent Medicare/Medicaid Billing

Friday, April 8th, 2011

The Justice Department has intervened in a qui tam lawsuit originally filed in September of 2009 against ambulance company Rural/Metro Corp., alleging the company fraudulently billed Medicare and Medicaid for services provided to dialysis patients which were either not necessary or not rendered. The suit, brought by a former employee of Rural/Metro subsidiary Rural/Metro of Central Alabama, alleges the company submitted claims for dialysis patients that were either bed-confined or required stretchers when in fact, many were not at all bed-confined or in need of a stretcher. In fact, many did not qualify for ambulance transport under Medicare or Medicaid requirements. The case is currently being investigated by the Office of the Inspector General of the Department of Health and Human Services.

For more information see:  http://www.tuscaloosanews.com/article/20110401/news/110409991&tc=yahoo

Proposed Major Overhaul to Whistleblower Protection Act

Friday, April 8th, 2011

Senator Chuck Grassley, a champion of qui tam whistleblower protection is co-sponsoring legislation to update the 1989 Whistleblower Protection Act originally co-authored by Senator Grassley. The law currently provides protection from retaliation to federal employees who expose possible waste, fraud and abuse in federal agencies. Grassley’s proposed updates would restore federal employee whistleblower protections, which Grassley contends have been denied because of decisions of the Merit Systems Protection Board, the Federal Circuit Court of Appeals and the anti-whistleblower sentiments of those in executive branch agencies.

The new legislation, co-sponsored by Grassley, Senator Daniel Akaka of Hawaii Senator Susan Collins of Maine and Joe Lieberman of Connecticut, would expand protections for the first time to include employees in the intelligence community. Other proposed changes include suspending the Federal Circuit Court of Appeals sole jurisdiction over federal employee FCA cases for five years; extending whistleblower protections and other non-discrimination and anti-retaliatory laws to Transportation Security Administration employees; allowing jury trials under certain circumstances for five years; and establishing an executive branch review policy if security clearance is denied or revoked because of a whistleblower disclosure. The bill has a reasonable chance of being enacted considering that a nearly identical bill was passed by the Senate and a modified version was passed by the House in 2010, but Congress adjourned before the two versions could be reconciled. A complete list of changes that would be enacted under the legislation is available via the link provided below.

For more information see:  http://www.iowapolitics.com/index.iml?Article=232646

Verizon Settles for $93.5 Million Amid Fraudulent Billing Claims

Friday, April 8th, 2011

Telecommunications giant Verizon Communications, Inc. paid the United States $93,525,410.96 amid allegations that subsidiary MCI Communications Services, Inc. fraudulently overcharged the General Services Administration (GSA) for voice and data telecommunications services contracts. The government alleges that MCI billed the GSA for various federal, state and local taxes and surcharges, violating the terms of their contract and regulations in connection with FTS2001 and FTS 2001 Bridge contracts. Additionally, Verizon, through MCI, was reimbursed for property taxes, common carrier recovery charges and other unallowable surcharges. Various Justice Department officials voiced hope that this would deter other government contractors from fraudulently billing the government for costs prohibited under their contracts. The whistleblower lawsuit was originally brought by Stephen M. Shea and 2Probe LLC in the District of Columbia.

Ohio Could Soon be Open for FCA Business

Friday, April 8th, 2011

Ohio Attorney General Mike DeWine has voiced his support for a state False Claims Act (FCA) in Ohio. The FCA legislation was introduced by Republican Senators Jim Hughes of Columbus and Scott Oelslager of North Canton. Like most state False Claims Act and the federal FCA, the Ohio FCA would allow whistleblowers to provide information about alleged fraud in state spending and potentially share in any amount recovered should the case be successfully prosecuted. In voicing his support, Attorney General DeWine stated “at a time when every penny counts, we must do all we can to recover as much as possible for the Ohio and our taxpayers.” The bill still must be passed in both chambers of the Ohio legislature and then be signed into law by the governor. Should the Ohio FCA successfully pass, the opportunities for FCA actions in the state could be endless.

 For more information see:  http://www.dispatch.com/live/content/local_news/stories/2011/04/07/dewine-backs-state-whistleblower-law.html?sid=101

War Zone Contractor Accused of Billing Taxpayers for Personal Security

Friday, April 8th, 2011

The Justice Department recently filed a False Claims Act action against engineering and construction firm KBR, Inc., the prime contractor on the Army’s Logistics Civil Augmentation Program III contract. As the prime contractor, KBR provided logistics support services to US troops stationed in Iraq. Prior to the filing of the False Claims Act action, the Army had disallowed $103 million in costs incurred by KBR, stating that the costs were related to KBR and its subcontractors hiring personal security personnel, which is prohibited under the government contract. KBR appealed the decision, and shortly thereafter, was slapped with the False Claims Act action by the Justice Department.

Though the security needs of the contractors were to be provided by the Army, KBR allegedly hired three personal security guards and armed a limited number of its own personnel. The Justice Department claims KBR did so without the necessary authorization and then knowingly charged the Army for the cost of the private security, despite it being prohibited by their contract. The case is sure to be contentious, as KBR has already filed a Motion to Dismiss and the Justice Department has countered with a Motion for Partial Summary Judgment.

For more information see:  http://www.bizjournals.com/washington/blog/fedbiz_daily/2011/03/the-hidden-cost-of-employee-protection.html

BMS Lakers Dream Camps and Diabetes at Disneyland

Friday, April 1st, 2011

In a qui tam lawsuit brought by three former employees, Bristol-Myers Squibb (BMS) is accused of fostering a culture that encouraged kickbacks. In a document titled “Bristol-Myers Squibb Cultural Expectations” published for the companies’ sales reps, employees are encouraged to commit company funds and personnel to regions that can produce gains. BMS also stressed to its employees the importance of “entrepreneurial risk tasking.” These included expending “significant resources” to “achieve impossible objectives.”

As specific examples of the culture of kickbacks, the relators offered a 1997 BMS Lakers “Dream Camp” to which physicians and their families were invited in an effort to encourage the physicians to prescribe the cholesterol drug Pravachol. The Dream Camp included meeting and getting basketball pointers from famous Lakers in addition to photos and autographs. The camp attendees were given purple jerseys emblazoned with “Pravachol” and the physicians were provided with CME about “Safety and Efficacy of HMG Therapy.” The invitations to the event, however, made no mention of medical-related activity. Additionally, in May 2001 BMS sponsored a Medical Education Diabetes Program at Disneyland at a cost of $5,000. During the same May 2001 time period, BMS was also sponsoring an educational symposium on diabetes for endocrinologist in Puerto Rico, at which physicians and their spouses were treated to travel, accommodations, and one recreational activity. The plaintiff’s claim these gifts were kickbacks which triggered insurers to pay for name brand drugs when it was either not necessary, or could have been substituted for a generic. The California Insurance Commissioner has intervened. 

For more information see:  http://www.bnet.com/blog/drug-business/bristol-myers-sent-docs-to-study-diabetes-at-disneyland-3-execs-claim/7786

Government Falls Short for Guidant Whistleblower

Friday, April 1st, 2011

In 2005, Guidant (now a division of Boston Scientific) admitted to knowing for three years that their Ventak Prizm heart defibrilator could short circuit, leading to both unnecessary shocks to the heart as well failures to shock when necessary, but the medical device giant did nothing to alert physicians or the public. After learning of the malfunctions, Guidant took steps to remedy the problem, but never notified the FDA. In 2005, after three physicians reported the failure of the model to revive a patient, the FDA recalled some of the faulty models and in 2007, Boston Scientific paid $240 million to settle patient lawsuits. In 2010, the Justice Department criminally charged Guidant resulting in a fine of $296 million, one of the largest penalties ever accessed to a medical device company.

Shortly thereafter, in January 2011 the government filed its civil lawsuit with James Allen named as the relator. After an eight year personal battle, the identity of the Guidant whistleblower has been revealed. Mr. Allen was implanted with one of Guidant’s faulty heart defibrillators, but after suffering severe and unnecessary shocks to his heart, he had the device removed in 2005 and launched his own investigation into Guidant, costing him personally $140,000. Allen filed his qui tam lawsuit against Guidant in 2008, alleging the medical implant device company made changes to the Ventak Prizm without FDA knowledge or approval. Allen’s lawsuit alleges more than 19,000 fraudulent claims amounting to taxpayers losses of $726 million. He also claims Guidant made changes to the device which the public is not yet aware of. The government’s suit is much more conservative, alleging 2,000 fraudulent claims to Medicare. Which figures are more accurate and how the suit will ultimately be decided is still unknown, but with such glaring differences despite the same whistleblower and similar allegations, this is certainly a case to watch.

 For more information see: http://www.startribune.com/business/118677724.html

Whistleblower Secrecy Remains Safe…For Now

Friday, April 1st, 2011

In a split 2-1 decision March 28th, the 4th Circuit U.S. Court of Appeals upheld the automatic 60 day sealing provision of the False Claims Act. The suit, brought by the American Civil Liberties Union, the Government Accountability Project and OMB Watch, alleges the secrecy unlawfully blocks the public’s access to judicial proceedings and violates the whistleblower’s right to freedom of speech by forbidding them to discuss the misconduct. They also argue it violates the separation of powers doctrine by not allowing judges to decide on case by case basis whether the matter should be sealed. The ACLU alleged specifically that the sealing of Qui Tam lawsuits was hiding Iraq war costs as well as the possibility of war profiteering. Judge James Dever, III states in the majority decision that the sealing provision protects the integrity of ongoing fraud investigations. In response to the plaintiffs’ claim that sealing Qui Tam complaints violates the separation of powers doctrine, Dever wrote that the complaints are subject to judicial review after 60 days and ultimately, all cases will be unsealed for public review. Additionally, the majority opinion states that whistleblowers are not forbidden from discussing the underlying misconduct that caused them to bring the complaint, rather they are only prohibited from discussing the existence of the complaint. They also ruled the plaintiffs had no standing to make the argument, since they could not produce a whistleblower who wanted to talk about the fraud and abuse but was prohibited from doing so. In a dissenting opinion, Judge Roger Gregory stated transparency was key to the fight against fraud and abuse. Additionally, he stated the seal provision should be decided by judges on a case by case basis, allowing for more public review. Additionally, he stated whistleblowers should be more free to discuss their allegations of abuse and fraud in public, thereby reducing the risk that the government will under-enforce the FCA for “political reasons.”

For more information see: http://www.washingtonpost.com/national/divided-appeals-court-in-virginia-affirms-the-secrecy-provision-of-federal-whistleblower-law/2011/03/28/AFOxujqB_story.html



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