Archive for June, 2012

Hospice Company Pays $6.1 Million for Submitting False Claims

Monday, June 25th, 2012

The United States government will collect $6.1 million from Hospice Care of Kansas LLC and its parent company, Ft. Worth, Texas-based Voyager HospiceCare Inc. as a result to resolve False Claims Act allegations. Former Hospice Care of Kansas nurse, Beverly Landis, under the qui tam, or whistleblower, provisions of the False Claims Act revealed that the hospice company was submitting false claims over a course of four years to Medicare for beneficiaries that did not have a terminal prognosis of six months or less. Later, the government found out that there were various practices that the company was involved in resulting in the submission of false claims such as implementation of an inadequate compliance program, delaying discharges of patients determined not to have a six month or less prognosis and instructions to staff to document patient conditions in a misleading manner. Ms. Landis will receive payments totaling $1.342 million from the $6.1 million.

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Whistle-Blower Program Under Review By IRS

Monday, June 25th, 2012

The Internal Revenue Service’s tax whistle-blower program has been scrutinized by lawyers and politicians. Now, the IRS will evaluate the program and improve its working practices and backlog. According to Deputy Commissioner for Services and Enforcement Steven T. Miller, the guidelines and procedures for managing whistle-blower complaints will be thoroughly examined by the IRS and by various internal and external stakeholders within a 90-day deadline. 

The whistle-blower program was created in 2006 by Congress in hopes to raise tax revenue. Only three awards in last five years have been paid since more than 1,300 allegations have been filed concerning tax underpayments of at least $2 million apiece.

The IRS agents and offices that work with whistle-blower cases will undergo internal performance reviews to see if the deadlines for cases are met. These deadlines include – the original meeting with the whistle-blower; the 90 days of initial review of each case; when taxes and penalties are collected and that the whistle-blower is notified to collect the reward.

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Whistleblower’s Medicare Fraud Suit Leads To $5.4 Million Settlement By Ambulance Company

Friday, June 22nd, 2012

The United States Government will collect $5.4 million from the notional ambulance company, Rural/Metro Corp, to settle False Claims Act allegations.  The ambulance company was accused of Medicare fraud, which was brought to light by Carl Crawley under seal in U.S. District Court.  Daily, Mr. Crawley had witnessed various necessary Medicare documents being forged to bill Medicare and Medicaid for services that did not occur or that were unnecessary.  Stemming from the allegations in Crawley’s suit, Joyce White Vance, the U.S. Attorney for the Northern District of Alabama, filed a complaint against Rural/Metro Corp as well.  The company claimed no wrongdoing while settling the charges.

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$5 Million Settlement In Federal Lawsuit Against Christus Spohn Health System

Thursday, June 21st, 2012

The United States Government collected $5 million from Christus Spohn Health System Corporation to resolve allegations of improperly admitting patients, which were filed under the False Claims Act.

Located in Texas, six hospitals of the Christus Spohn Health System Corporation falsely claimed outpatients as inpatients to be able to send false billings to Medicare.  Most patients were released from the hospital within less than 24 hours.  Since inpatient billing codes cost more than outpatient codes, the hospitals were wrongfully collecting the excess money.  The hospitals accused are Christus Spohn Hospitals in Corpus Christi – Shoreline, Corpus Christi – Memorial, Corpus Christi – South, Alice, Beeville and Kleberg.

Under seal under the qui tam provisions of the False Claims Act, Christus – Shoreline’s former director of case management filed the lawsuit claiming the hospitals were submitting these false claims.  If the government’s investigation validates these allegations, then the former director will receive 20% of the $5,100,481.74 recovery.

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Pharmaceutical Companies To Pay U.S. $4.7 Billion In False Claims Act Cases

Wednesday, June 20th, 2012

MedicationThe U.S. Government continues to collect federal funds that were not appropriately paid to private companies.  Three large pharmaceutical companies still owe the U.S. Government an amount totaling $4.7 billion as a result to False Claims Act allegations.

In 2011, the Department of Justice (DOJ) announced some of the largest sums owed to the U.S. Government under the FCA.   Merck & Co., Inc. owes the U.S. Government $950 million related to claims concerning the drug Vioxx.  Merck was engaging in unlawful conduct such as false claims to Medicaid and improper marketing.  Amgen Inc. announced it was setting aside $750 million to resolve FCA claims involving their anemia drug, Aranesp.  Allegations against Amgen Inc. are a result of kick-backs and off-label marketing of Aranesp.  GlaxoSmithKline PLC publicized that it was going to set aside $3 billion to resolve FCA liability pertaining to its drug Avandia.

This is the most recent group of cases involving major pharmaceutical companies and government healthcare programs since 2003. Still, there are over 150 other cases that the DOJ is investigating concerning overcharges from drug companies totaling billions of dollars.

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Philadelphia Inquirer Article On The False Claims Act

Tuesday, June 19th, 2012

There was a great article in the Philadelphia Inquirer on Thursday, June 14, 2012.  David Sell, who covers the pharmaceutical industry for The Inquirer’s Business Department, wrote about the False Claims Act and Acting Assistant Attorney General Stuart F. Delery’s speech at the American Bar Association’s Ninth National Institute on the Civil False Claims Act and Qui Tam Enforcement. 

One of our attorneys, Marc S. Raspanti, also spoke at this seminar.

To view Sell’s article, please see:

Whistleblowers To Soon Receive First SEC Whistleblower Program Payouts

Thursday, June 14th, 2012

The Securities and Exchange Commission (SEC), since its creation in 1934, has always had a program in place to report fraud, however this program has not had any incentive for people to report companies to the SEC until now.

In the summer of 2010, Congress passed a sweeping financial regulatory overhaul as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which includes whistleblower provisions for violations of the nation’s securities laws.  Although congress previously afforded protections to whistleblowers that provided information concerning the violations of the securities laws under the Sarbanes-Oxley Act of 2002, those provisions were deemed weak and insufficient.  The new law, for the first time, provides for payments to whistleblowers (between 10% and 30% of the total of monetary sanctions recouped) who provide information that the SEC uses in furtherance of an enforcement action.  Additionally, the law prohibits employers from retaliating against whistleblowers.

Payments to whistleblowers have yet to be made under the SEC Whistleblower Program because of the length of the reporting and the appeal process.  It is expected that these first payments will be made soon.  The SEC is bracing for complaints to increase once payouts begin and people see the program working as it was designed.

While the SEC Whistleblower Program is relatively new, one can look at a similar plan launched by Congress in 2006 to gauge its success.  The IRS Whistleblower Law enables private individuals to report underpayments of tax and persons otherwise guilty of violating the internal revenue laws.  The IRS plan also awards whistleblowers a percentage of the taxes recovered (between 15% and 30%).  The first of these cases under the IRS plan was wrapped up in April 2011.  An internal accountant received a payment of $4.5 million after reporting his company’s underpayment of more than $20 million in corporate taxes.

One of the first laws that protected whistleblowers was the False Claims Act.  Enacted by Abraham Lincoln during the Civil War (1863) and amended in 1986, Federal and State False Claims Acts have been the most successful weapon in combating fraud against taxpayers.  Since its amendment, more than $33 billion has been recovered by federal and state governments across the United States as a result of false claims lawsuits.  Whistleblowers have been paid upwards of $2 billion in statutory rewards for filing False Claims Act cases on behalf of the federal government.

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Whistleblower In Orthofix Case To Receive $9.2 Million As Part Of Settlement

Wednesday, June 13th, 2012

CB063459The US Justice Department announced an agreement has been reached with Orthofix, Inc. to resolve civil and criminal charges brought as a result of a whistleblower action initiated by Jeffrey Bierman, a Midwest healthcare consultant. 

Orthofix manufactures and distributes bone growth stimulators under various trade names.  Orthofix was charged with having sales representatives fill out Medicare required Certificates of Medical Necessity without the requisite  input from the treating physicians, forging some physician’s signatures and encouraging the physician’s staff to improperly estimate the length of treatment for patients.  As part of the $42 million dollar settlement, Mr. Bierman will receive $9.2 million for his role in bringing the fraudulent practices of Orthofix to the attention of the Federal Government.

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St. Jude Medical Inc. To Pay $3.65 Million For Falsely Inflating Price Of Pacemakers And Defibrillators

Friday, June 8th, 2012

St. Jude Medical Inc., a medical device company based out of Little Canada, Minnesota, agreed to pay $3.65 million to the federal government to settle False Claims Act allegations that it falsely inflated the price of pacemakers and defibrillators sold to the government.

According to the to the Justice Department, St. Jude would actively market its pacemakers and defibrillators by touting extensive credits which were available to buyers if the device needed to be replaced while under warranty.  However, St. Jude knowingly failed to give these credits to device buyers, including the Department of Veterans Affairs and Department of Defense hospitals, even when the product was replaced while still under warranty.

The settlement arose from a case brought by two whistleblowers under the qui tam provisions of the False Claims Act.  As their share of the settlement, the whistleblowers will receive $730,000 as their share of the settlement.

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Arizona Hospice Company To Pay $3.7 Million For Fraudulently Billing Medicare

Thursday, June 7th, 2012

Hospice Family Care Inc., a hospice company based out of Mesa, Arizona, has agreed to pay $3.7 million to the federal government to settle allegations that it submitted false claims to Medicare.  The company and its former owners, Nancy Smith and Nancy Turner, agreed to settle allegations that it sought payments from Medicare for patients who were ineligible or partially ineligible for hospice care and for billing Medicare for a higher level of care than what was medically necessary for certain patients.

As part of the settlement, both Smith and Turner agreed to be excluded from Medicare, Medicaid, and other federal health programs for seven years.

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