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

Last week, the United States Department of Justice announced that it would intervene in a False Claims Act suit against St. Jude Medical, Inc., alleging that the manufacturer of pacemakers and other heart devices participated in an illegal kickback scheme resulting in the submission of false claims for reimbursement to the government.  The U.S. had previously declined to intervene in December 2009, but now, after reviewing additional documents and interviewing more witnesses, believes it has “good cause to intervene.”

The suit against St. Jude Medical was filed by Charles Donigan, who worked as a technical service specialist for the company from 2004 until 2007.  Donigan’s suit alleged that St. Jude Medical paid kickbacks to doctors, hospitals and other healthcare providers to induce them to prescribe its products.  The providers then submitted claims for reimbursement to Medicare and other federal programs in violation of the False Claims Act, according to Donigan.  The suit also alleges that St. Jude violated a separate anti-kickback law by providing “sham fees” for phony clinical studies, and by providing doctors and their spouses with various lobbyist-like perks, such as vacations, tickets to sporting events, and “educational” programs at luxury resorts.

The government’s decision to intervene comes on the heels of a June settlement with St. Jude in a separate False Claims Act suit, under which the company agreed to pay $3.7 million to settle allegations that it paid illegal kickbacks to Kentucky and Ohio hospitals. 

For more information see:  http://www.reuters.com/article/idUSTRE6755E820100806?type=domesticNews

Last week, Tenet Healthcare acknowledged, in a regulatory filing, that the United States Department of Justice is investigating whether one of Tenet’s hospitals fraudulently billed Medicare for heart defibrillator implant surgeries.  The D.O.J. probe dates to March 2010, when it issued a demand to Tenet under the False Claims Act seeking information and patient records detailing Tenet’s submissions for implantable heart defibrillator procedures as far back as 2002.  According to Tenet’s filing, the company believes the Justice Department is attempting to determine if the defibrillator procedures followed Medicare coverage requirements.

Implantable defibrillator manufacturers Medtronic and St. Jude Medical, Inc. previously acknowledged receiving similar requests from the Justice Department in March.  Like Medtronic and St. Jude, Tenet said it will cooperate with the government’s investigation.

For more information see:  http://www.reuters.com/article/idUSN0317069820100803