In 2006, Charles Donigan sued his former employer, St. Jude Medical, under the Federal False Claims Act for allegedly paying kickbacks to physicians and other health care providers to induce them to use St. Jude medical devices, including pacemakers. Four years later, after the government indicated its intent to intervene in the lawsuit, St. Jude is discussing settlement with the government. The allegations center around payments made to physicians for data collection and studies of St. Jude products, which included entertainment, travel and passes to sporting events. It is not clear how much money St. Jude might pay to settle. But, the case is part of a broader investigation of medical device kickbacks in which Boston Scientific recently settled claims for $22 million.

For more information see:  http://online.wsj.com/article/BT-CO-20100826-711507.html

Allergan settled claims of off-label marketing of its Botox pharmaceutical and other claims for a total of $600 million.  The government accused Allergan of recommending Botox for unapproved uses including headache, pain, spasticity and juvenile cerebral palsy.  As part of the settlement, Allergan also pleaded guilty to misdemeanor charge of misbranding, or inadequate labeling of products for intended uses.  Allergan is also required under the settlement to hire and pay for a third-party to monitor is compliance efforts for the next five years. 

For more information see:  http://online.wsj.com/article/SB10001424052748703882304575465371767239834.html?mod=googlenews_wsj

A physician, clinic owner and a number of clinic nurses pleaded guilty to participating in a large Medicare fraud conspiracy.  Dr. Fred Dweck, Yudel Cayro and others referred numerous Medicare recipients for unnecessary home health care services and charged those services to Medicare. In total, Medicare paid more than $32 million of the $53 million fraudulent claims billed. The clinic owner admitted to receiving kickback from individuals who recruited Medicare recipients, and from owners of Miami home health agencies. Several nurses also pleaded guilty for falsifying patients files of Medicare beneficiaries to make it appear that they qualified for home health care and therapy services. Each of the defendants faces up to 10 years in prison for each conspiracy county to commit health care fraud.

For more information see:  http://www.bizjournals.com/southflorida/stories/2010/08/30/daily16.html

St. John’s Medical Center of Santa Monica, California has agreed to repay the federal government $5.25 million to settle claims that it overbilled Medicare.  The government alleged that St. John’s “turbocharged” its claims to Medicare by raising charges more quickly than its actual costs rose.  According to the government, the practice allowed St. John’s to obtain significantly greater outlier payments, which are payments designed to reimburse hospitals for extraordinarily costly care to patients, that it was not entitled to receive.  The payment covers claims made between 1996 and 2009. 

For more information see:  http://www.fiercehealthcare.com/story/medicare-fraud-saint-johns-health-center-pay-5-25m-overbilling/2010-08-26

On August 20, 2010, it was announced that a Medicare and Medicaid managed-care company, WellCare Health Plans, Inc., reached a preliminary settlement to pay $137.5 million to settle a False Claims Act case which has been pending for the past four years.  The allegations arise from claims that WellCare was responsible for schemes to avoid repaying overpayments which it received from Florida and New York’s Medicaid programs, inflate reinsurance payments, and disenroll Medicaid beneficiaries whom the company considered unprofitable.  The False Claims Act complaint also alleged that the company stole $400 million to $600 million from Medicare and Medicaid programs in several states.

This lawsuit was initiated by a former WellCare senior analyst, Sean Hellein, who worked with the Justice Department and wore a hidden wire as part of the undercover investigation into the alleged criminal misconduct by WellCare.  The False Claims Act allows the individual who initiates the lawsuit to share in a portion of the recovery obtained in any lawsuit or settlement.

For more information see:  http://www.ama-assn.org/amednews/2010/08/16/bisg0820.htm

or http://online.wsj.com/article/BT-CO-20100810-713391.html

Late last month, a federal court in Virginia ruled that the government may proceed with a False Claims Act suit against a juvenile psychiatric facility run by subsidiaries of Universal Health Services, Inc.  The suit alleges that the Marion Youth Center, a treatment center for adolescent boys, submitted false claims to Medicaid.  Specifically, the government claims that the defendants falsely represented that they provided inpatient psychiatric services to children covered by Medicaid.  In reality, the government claims that the facility failed to provide psychiatric treatment and instead operated like a detention facility, submitting bills to Medicaid for what amounted to little more than confinement.  The government also alleges that the facility deliberately provoked and taunted children on Medicaid to create a pretext justifying longer stays for the children, thus increasing the Marion Youth Center’s Medicaid billings and payments.

The defendants had moved to dismiss the suit, arguing that the government failed to allege a violation of the False Claims Act, or a similar Virginia anti-fraud law.  The court agreed as to parent company UHS, but held that the case may proceed against two UHS subsidiaries that operate the Marion Youth Center.  The government is now seeking to amend its complaint to add detailed allegations that UHS supervised and controlled operations, including Medicaid billing, at Marion.

For more information see:  http://online.wsj.com/article/BT-CO-20100809-711002.html?mg=com-wsj