Archive for April, 2012

CMS Final Rule Aims to Save $1.6 Billion in Fraud

Monday, April 30th, 2012

On April 24, 2012, the Centers for Medicare & Medicaid Services (CMS) issued a final rule requiring stronger protections against fraudsters.  The final rule allows only qualified, identifiable providers and suppliers to order or certify medical services, equipment, and supplies for Medicare beneficiaries.  

CMS will be diligently verifying provider credentials.  Providers and suppliers will be required to provide their National Provider Identifier numbers (NPI) when applying for Medicare and Medicaid reimbursements.  According to CMS, the agency together with the states can then use the NPI and provider credentials to connect specific claims to the ordering or certifying physician or eligible professional.

By issuing the final rule, CMS is planning to eliminate Medicare fraud and save taxpayers nearly $1.6 billion over 10 years.

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Walgreens Pharmacy Chain Pays $7.9 Million to Resolve False Prescription Billing Case

Monday, April 30th, 2012

On April 20, 2012, the Department of Justice announced that Walgreens, a national retail pharmacy chain has paid the United States and affiliated states a $7.9 million settlement to resolve allegations that the pharmacy violated the False Claims Act.  Walgreens, allegedly offered illegal incentives to beneficiaries of government health care programs which include Medicare, Medicaid, TRICARE, and the Federal Employees Health Benefits Program (FEHBP).  Incentives included gift cards, gift checks, and other monetary benefits that were offered to beneficiaries for transferring to Walgreens from other pharmacies. 

 The allegations were brought to the government in two separate whistleblower lawsuits filed under the qui tam provisions of the False Claims Act and statutes.  Relators, Cassie Bass a pharmacy technician and former Walgreens employee, and Jack Chin a pharmacist will receive $1,277,172 from the U.S. government for filing the actions.  The federal government will receive $7,298,124. 

Barbara L. McQuade, U.S. Attorney for the Eastern District of Michigan states that patients should “make decisions based on legitimate health care needs.”  By luring customers in through gift cards and other enticements, Walgreens manipulated customers into selecting a pharmacy for the wrong reasons.  When a person’s health is at stake, the decision cannot be based on gifts. 

Stuart F. Delery, Acting Assistant Attorney General for the Civil Division of the Department of Justice highlights the government’s dedication to protecting unsuspecting customers of prescription drugs.  He states that, “this case represents the government’s strong commitment to pursuing improper practices in the retail pharmacy industry that have the effect of manipulating patient decisions.” 

The Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative was announced in May 2009 by Attorney General Eric Holder and Secretary of the Department of Health and Human Services Kathleen Sebelius.  The program was formed to reduce and prevent government health care fraud, which includes the Medicare and Medicaid programs.  By January 2009, the government had recovered  a total of $9 billion through one of its most powerful tools, the False Claims Act. 

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McKesson Corp. Pays U.S. More Than $190 Million to Resolve False Claims Act Allegations

Monday, April 30th, 2012

On Thursday, April 26, 2012, Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division; New Jersey U.S. Attorney Paul J. Fishman; and Daniel R. Levinson, Inspector General of the U.S. Department of Health and Human Services announced that the McKesson Corporation has agreed to pay the United States a $190 million settlement to resolve allegations that the company violated the False Claims Act.  

The government alleges that McKesson, a large drug wholesaler, reported inflated pricing information for a large quantity of brand name drugs to First DataBank (FDB), a publisher of drug prices that are used by most state Medicaid programs to set payment rates for pharmaceuticals.  The false information caused FDB to publish inflated AWPs (Average Wholesale Price) for those drugs.  

The Medicaid program is funded jointly by the federal and state governments.   This settlement resolves claims based on the federal share of Medicaid overpayments.  State governments can separately negotiate with McKesson to resolve claims based on the states’ shares of the Medicaid overpayments.

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U.S. Intervenes in False Claims Lawsuit Alleging Knowing Failure to Pay Import Duties by Japanese and U.S. Companies

Monday, April 30th, 2012

On April 24, 2012, the Justice Department announced that a lawsuit was filed by the Unites States and whistleblower, John Dickson under the qui tam, provisions of the False Claims Act.  The lawsuit was filed in the U.S. District Court for the Western District of North Carolina.

The Defendants include Japanese company, Toyo Ink Manufacturing Co. Ltd. and its U.S. subsidiaries: Toyo Ink International Corp., located in New York; Toyo Ink America LLC, located in Illinois; and Toyo Ink Manufacturing America LLC, located in New Jersey.  Toyo Ink, which has operations worldwide, is a leading provider of printing inks.

The government alleges that Toyo Ink Manufacturing Co. Ltd. and its subsidiaries knowingly misrepresented the country of origin on documents presented to U.S. Customs and Border Protection to avoid paying antidumping and countervailing duties on imports of the colorant carbazole violet pigment number 23 (CVP-23).  Although Toyo’s CVP-23 imports from China and India underwent a finishing process in Japan and Mexico, the complaint alleges that this process was insufficient to change the country of origin.

The Department of Commerce assesses antidumping and countervailing duties, which are collected by U.S. Customs, to protect U.S. businesses by offsetting unfair foreign pricing and government subsidies.  Imports of CVP-23 from China and India have been subject to these duties since 2004.  

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ATK Launch Systems Inc. Settles False Claims Product Substitution Case for Nearly $37 Million

Monday, April 30th, 2012

In a Qui Tam False Claims Act suit filed in the U.S. District Court for the District of Utah,  ATK Launch Systems Inc., has agreed to pay the United States $21 million and provide necessary in-kind services worth $15,967,160 in reparation costs for 76,000 malfunctioning para-flares that were sold to the government.  According to the government’s allegation, ATK sold dangerous and defective LUU-2 and LUU-19 illumination flares to the Army and the Air Force under Department of Defense contracts.  The company has agreed to pay a $36,967,160 settlement to the Unites States government to resolve the allegations.  

The flares were used during nighttime combat in Iraq and Afghanistan.  The government alleges that the flares provided by ATK were incapable of withstanding a 10-foot drop test as required by specifications.  During the test, flares either exploded or ignited, and ATK was aware of this issue at the time it submitted claims for payment. 

The investigation team was led by the Defense Criminal Investigative Service, the Air Force Office of Special Investigation, the Navy Naval Criminal Service, the Army Criminal Investigative Command and auditors from the Defense Contract Audit Agency, and the Defense Contract Management Agency.  Technical support was provided by the Army Research Laboratory in Aberdeen, Md., and several other agencies. 

“Our men and women in combat deserve equipment that meets critical safety and performance requirements,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division.  The U.S. government plans to diligently pursue entities that put the lives of our soldiers in jeopardy to prevent undue harm from occurring and recover American taxpayer monies.

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USDOJ: Ohio Construction Firm Agrees to Pay $500,000 to Resolve False Claims Act Allegations

Friday, April 27th, 2012

On April 23, 2012, the United States Department of Justice announced that Anthony Allega Cement Contractor, Inc., a Cleveland based construction firm, has agreed to pay $500,000 to the U.S. government to resolve allegations under the False Claims Act.  The investigation was conducted by the Justice Department’s Civil Division, the United States Attorney’s Office for the Northern District of Ohio, DOT’s Office of Inspector General (OIG) and the Federal Aviation Administration.  According to the findings, Allega was hired by the U.S. government to construct and pave a new runway at Cleveland’s Hopkins International Airport between 2001 and 2006. The company allegedly failed to comply with the U.S. Department of Transportation’s (DOT) Disadvantaged Business Enterprise (DBE) program and report its progress.  Allega claimed that materials and services were provided by a company named Chem-Ty Environmental.  However, Chem-Ty was allegedly only used as a facade by Allega to make it appear as if a DBE had performed the work.  Since compliance with the DBE program was required under Allega’s contract with the government, the company’s failure to comply constituted a False Claims Act violation.  

The Disadvantaged Business Enterprise DBE program was created to provide opportunities to businesses owned by minorities, women, socially, and economically disadvantaged individuals to participate in federally-funded construction and design projects.   Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division believes that those whom defraud the DBE program are taking advantage both of taxpayers and the businesses that the program is designed to assist. 

Michelle McVicker, OIG Regional Special Agent in Charge notes that the Secretary of Transportation and the USDOT-OIG, together with the Federal Aviation Administration, law enforcement, and prosecutors are working to prevent and shut down DBE fraud schemes in Ohio and the United States.

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Sprint Nextel Corp. sued for over $300 Million

Friday, April 20th, 2012

On Thursday, Sprint Nextel Corp., the third largest mobile service provider in the United States, was sued by the state of New York for over $300 million for allegations of tax fraud. The State of New York claimed that Sprint intentionally decided not to collect or pay taxes, worth millions of dollars, for its cell phone service.

The complaint was filed in the New York Supreme Court by New York Attorney General Eric Schneiderman, in response to whistleblower information from the company Empire State Ventures. This lawsuit was the filed under the state’s False Claims Act, making it the first tax enforcement case to be filed under the act.

Sprint is accused of failing to properly bill their customers over the past seven years, leaving more than $100 million in taxes unaccounted for. Sprint decided not to pay and collect taxes to lower service costs by $4.6 million a month as a scheme to draw away customers from AT&T and Verizon Wireless.

Sprint’s shares have fallen in price after the news was released and is expected to have a first-quarter loss of about 41 cents per share, or $1.296 billion, according to Wall Street analysts.

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Judge Sarris Accepts Plea Over Vioxx Investigation

Friday, April 20th, 2012

A spokesperson of Merck Sharp & Dohme announced that the company agreed to plead guilty to one count of misbranding Vioxx. The unit of Merck & Co., the second-largest U.S. drug maker, plead guilty to a criminal misdemeanor charge as part of a $950 million settlement of a U.S. government probe of its illegal marketing of the painkiller Vioxx.

To resolve civil claims, stating that Merck Sharp & Dohme sold Vioxx for unapproved uses and made false statements about its cardiovascular safety, the company agreed to pay $628.3 million towards those claims, as well as a $321.6 million criminal fine. U.S. District Judge Patti Saris accepted the plea.

Prior Settlements

The company already settled thousands of lawsuits claiming injuries that totaled $4.85 billion and legal expenses worth $1.9 billion. In October 2010, it put aside $950 million for the criminal settlement that resulted in the claim.

As part of the plea, the company admitted to selling Vioxx for a period of three years to treat rheumatoid arthritis prior to approval from the FDA. The drug maker did not get permission to sell Vioxx for that ailment until April 2002. The FDA sent a warning letter on Sept. 17, 2001 in response to the company’s salespeople pushing Vioxx to physicians for rheumatoid arthritis.

Grand Jury Investigation

In March 2009, Federal prosecutors had recognized the company as a target of a grand jury investigation. The prosecutors inspected the company’s handling of internal research of Vioxx’s health risks and their marketing strategy in selling the drug starting in 2004, Merck stated.

Preceding to the agreement to create a $4.85 billion settlement fund in 2007, the company had 16 Vioxx lawsuits and won 11 of them. Court filings said the company settled to pay about $4 billion to resolve heart-attack claims and about $850 million for stroke suits.

The criminal case is U.S. v. Merck, Sharp & Dohme Corp., 11-CR-10384-PBS, U.S. District Court, District of Massachusetts.

Johnson & Johnson commits more than 238,000 violations of Arkansas’s Medicaid fraud laws

Wednesday, April 18th, 2012

After an Arkansas jury found that Johnson & Johnson (JNJ) company officials misled doctors and patients about the risks of one of their drugs, a judge ruled that JNJ must pay more than $1.1 billion in fines. The drug was an antipsychotic medication called Risperdal. The jury had concluded that J&J’s marketing of this particular drug violated both Medicare fraud laws and Arkansas’s deceptive trade practices statutes.

The judge in the case, The Honorable Tim Fox of Arkansas, found “J&J and its Janssen unit committed more than 238,000 violations of the state’s Medicaid fraud laws by illegally marketing Risperdal over an almost four-year period starting in 2002.” The Judge sentenced each violation to a $5,000 fine, raising the total to over $1.1 billion.

This judgment is the largest of the three J&J state cases alleging J&J hid Risperdal’s risks and tricked Medicaid regulators into paying more than they should have for the medicine. Eleven state attorneys general have sued J&J to date relating to the Risperdal sales practices.

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RCOG to pay $3.8 Million to Settle False Claims Act Case

Wednesday, April 18th, 2012

The Justice Department announced on April 3, 2012 that Radiotherapy Clinics of Georgia LLC, a radiation oncology practice, and its affiliates RCOG Cancer Centers LLC, Physician Oncology Services Management Company LLC, Frank A. Critz, M.D. and Physician Oncology Services L.P. (jointly, RCOG) agreed to pay $3.8 million to settle claims that they violated the False Claims Act.  RCOG, located in Georgia, allegedly billed Medicare for medical treatment that they provided to prostate cancer patients in excess of those permitted by Medicare rules and for services that were not medically necessary. 

There were two relators, or whistleblowers, involved in this civil settlement filed under the Qui Tam provisions of the False Claims Act. The complaints, which were filed separately by the two relators, were consolidated into the case captioned United States ex rel. R. Jeffrey Wertz and Rebecca S. Tarlton v. Radiotherapy Clinics of Georgia, LLC, et al., Civil Action No. 1:08-CV-2244, pending in the U.S. District Court for the Northern District of Georgia.  The relators, R. Jeffrey Wertz and Rebecca S. Tarlton, M.D., will receive $646,000 as their share of the proceeds.

This case was investigated jointly by the Commercial Litigation Branch of the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Northern District of Georgia, the FBI and HHS-OIG.

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