False Claims Act Resource Center

Archive for September, 2013

Federal Ruling: CVS Must Produce Documents Related To Alleged False Claims

Friday, September 6th, 2013

A federal judge ruled that CVS subsidiary Caremark Rx (revenue of $123 billion in 2012) must produce documents related to its alleged practices of submitting fraudulent Medicare claims.  CVS and the second largest health administration, Medical Card System (MCS) had an agreement dating back to June 2003.  Another CVS subsidiary, Silverscript, agreed to provide a Medicare Part D voluntary prescription drug benefit program three years later. 

The Medicare Part D retail and mail order pharmacy claims paid by MCS between January 1 and December 31, 2006 were audited by Pharm/Dur, per MCS, in February 2007.  Pharm/Dur found 48,702 Medicare Part D claims that Caremark falsely paid for a total cost of approximately $4.3 million to MCS.  They were all given to the Centers for Medicare and Medicaid Services for payment.

Anthony Spay, licensed physician and owner of Pharm/Dur, filed suit in the Eastern District of Pennsylvania, alleging violations of the False Claims Act.  Furthermore, due to contract disputes between MCS and Caremark, litigation ensued in the U.S. District Court of Puerto Rico.  After the defendants moved to dismiss on April 23, 2012, the government filed a statement of interest on September 11, 2012.  CVS’ motion was denied on December 20, 2012.  The government then served the defendants 60 separate requests for document production in March.

On a June 4, 2012 teleconference, Caremark refused to withdraw their objections, but did agree to submit additional documents dating back to January 1, 2008.  The government then filed a Motion to Compel on July 2, 2013 and the motion was partially granted last week.  The ruling states that Spay’s claim that CVS continued to submit fraudulent claims from 2006 to the present does not validate expansion of discovery.  Senior U.S. District Judge Ronald Buckwalter wrote, “Although plaintiff was free to plead with requisite Rule 9(b) specificity that the other practices at issue – failure to review for over-utilization, failure to ensure prior authorizations, and failure to apply negotiated MAC (Medicare Administrative Contractors) pricing – were committed on a nationwide basis, he neglected to do so.”

The rule also states discovery may be pursued by the government on the nationwide claims in Puerto Rico, New York, Ohio, Pennsylvania, Illinois and Florida.

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US And Switzerland Establish New Tax Evasion Program For Swiss Banks

Thursday, September 5th, 2013

The United States announced a new program in cooperation with the Swiss government that allows Swiss banks not currently under criminal investigation to be eligible for non-prosecution agreements in exchange for their cooperation in investigating offshore tax evasion schemes.  The program will require participating banks to pay penalties, disclose cross-border activities, provide detailed information on accounts in which US taxpayers have an interest, cooperate in treaty requests for account information, provide detailed information on transferor banks that have transferred funds into secret accounts, and to close accounts of taxpayers that have failed to comply with reporting obligations.  The program is designed to help the government prosecute taxpayers that have moved funds to different banks to enhance the secrecy of the accounts.  The program is also intended to help Swiss banks resolve their liabilities with the US government for failing to disclose secret accounts where tax evasion is suspected.  

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IRS Names New Director For Services And Enforcement

Wednesday, September 4th, 2013

The IRS recently named John Dalrymple as the new Deputy Commissioner for Services and Enforcement.  In that role Dalrymple will oversee four IRS operating divisions including Wage and Investment, Large Business & International, Small Business/Self-Employed and Tax Exempt and Government Entities.  He will also supervise the Criminal Investigation Division, the Office of Professional responsibility, the Return Preparer Office and the IRS Whistleblower Office.  Dalrymple comes to the position with 31 years of experience in a variety of departments at the IRS. 

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IV Saline Solution Subject To Significant And Hidden Markups

Wednesday, September 4th, 2013

A recent article in the New York Times discloses how an IV bag of saline solution, which costs at most $1 to manufacture, ends up costing hospital patients hundreds of dollars.  In “How to Charge $546 for Six Liters of Saltwater,”  the author details charges to a group of individuals treated for food poisoning in upstate New York.  The products started at one of a few manufacturers , Baxter and Hospira, who prepare the solutions with Morton Salt and water in a sterilized process.  The liter costs no more than a dollar to prepare and supply.

The products are distributed to hospitals through three  group-purchasing organization that handle contracts for more than one half of all institutional medical supplies sold in the US, and through a few large distributors that buy and store the medical supplies.  Although the distributors did not disclose their prices to the hospitals, because of their market position they have an incentive to establish high prices for the products.  The hospital end-users then tack on additional charges to the saline solution.  In some instances the IV therapy was charged at a rate of $787 for an adult and nearly $400 for a child.  This did not include charges for administering the IV or for the associated hospital services.  The article highlights how prices in health are concealed and how health care providers take advantage of the average consumer’s lack of pricing information.  The IV solutions contain no more than sterilized salt water, and yet hospital continue to charge hundreds upon hundreds of dollars for something that essentially costs nothing. 

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MRI Contractor Gets Scanned For False Claims

Wednesday, September 4th, 2013

Imagimed, LLC and several of its former owners and staff physicians settled allegations of false claims with the US Attorney for the Northern District of New York.  The false claims concerned Imagimed’s fraudulent practice of performing MRI’s with contrast dyes without direct supervision of a qualified physician.  A physician is required to be present because of the risk of anaphylactic shock.  Imagimed submitted claims for MRI’s claiming that a physician had been present when, in fact, no physician was present.  Claims also involved improper referrals of MRS patients to Imagimed by physicians that had an improper financial relationship with the company.  The claims alleged violations of the Stark laws and the Anti-Kickback Statute.  The defendants paid $3.57 million to settle the claims.  The relator, radiologist Patrick Lynch will receive $565,000 from the proceeds. 

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