Archive for the ‘Healthcare’ Category

Genetic Testing Gold Rush Gives Rise To Fraud Allegations

Tuesday, December 10th, 2019

On Sept. 27, the U.S. Department of Justice announced criminal charges against 35 individuals across various jurisdictions, allegedly involved in genetic testing fraud schemes that cost taxpayers over $2.1 billion.

The government asserted that the individuals had engaged in audacious schemes to target seniors and the disabled through the ordering of cancer genetic screening, or CGx, laboratory tests. CGx tests are performed to screen patients for genes that may show that a patient is predisposed to developing certain cancers.

The DOJ alleged that physicians were bribed to order these very expensive DNA tests. The government claimed that in many cases the physicians did not even treat the patients or only saw them via a cursory telemedicine consultation.

U.S. Attorney Bobby L. Christine of the Southern District of Georgia warned that “[w]hile these charges might be some of the first, they won’t be the last.” Christine’s warning may prove prescient.

Just last month, Reuters labeled genetic testing in the elderly as the “[n]ew frontier in health fraud.” Genetic testing fraud indeed appears to be very much on the rise and these recent indictments are not the DOJ’s first foray into the area. The federal government has launched over 300 investigations into alleged fraud in the genetic testing industry, many of which are almost certainly ongoing.

Just as several years ago the toxicology industry became inundated with fraudulent schemes, genetic testing, which is similarly lucrative and prone to abuse, is particularly fertile ground for fraudulent diagnostic testing schemes.

Genetic Testing: The Basics

Genetic tests are not limited to CGx cancer screenings. Genetic testing can be used in various other respects, both legitimate and illegitimate. For example, pharmacogenetic/pharmacogenomic, or PGx, tests are another major growth area in the genetic testing arena where concerns over fraudulent conduct have grown substantially in recent years.

PGx tests, when used legitimately, are aimed at identifying genetic variations suggesting that a patient may have an unusual reaction to a specific medication (e.g., a certain genetic variation may show that a patient may metabolize a medication at an unusually low or high rate). PGx tests may, therefore, be useful if a patient has shown an otherwise unexplained reaction to a certain medication.

Yet, the scientific evidence supporting PGx tests (and genetic testing generally) in the vast majority of cases remains quite slim. To date, Medicare has generally recognized that PGx and other genetic tests are medically necessary in only a very narrow set of cases. Medicare administrative contractors have issued numerous local coverage determinations making that clear.

Even where no local coverage determination is at issue, to be reimbursable, a test must still be medically necessary and thus the absence of an local coverage determination addressing a particular test does not mean that the test meets the medical necessity standard.

Further, the Medicare claims processing manual explains that screening tests (genetic or otherwise) are generally not covered by Medicare.[1] A practitioner who routinely performs genetic tests on patients, regardless of each patient’s clinical history and presentation, would almost certainly run afoul of Medicare’s requirements.

Despite the currently limited utility of genetic tests, Medicare has paid billions for these services. Between 2015 and 2018, Medicare payments for genetic tests more than doubled, to well over $1 billion in 2018. As the recent indictments show, the widespread use of these tests may have less to do with clinical utility and more to do with financial incentives.

Other genetic testing cases show that the DOJ’s recent crackdown is not a flash in the plan.

Given the sums of money at issue, the genetic testing industry has become a magnet for enterprising individuals. As has occurred in health care bonanzas of past, with the potential for great riches have come bad actors. Fraudulent schemes vary from the more nuanced to the facially egregious.

Regulators and whistleblowers have taken notice. In the indictments discussed above, the scheme fell on the latter end of the spectrum, involving payments to doctors to issue referrals for patients that, in some cases, they never even saw. More nuanced but not doubt troubling schemes have drawn the DOJ’s ire. Recent False Claims Act settlements are instructive.

Just weeks after the September indictments, the DOJ announced a False Claims Act settlement on Oct. 9, with pharmacogenetic lab UTC Laboratories Inc. and three of its principals. The lab agreed to pay $41.6 million with the three individuals responsible for another $1 million. The case resolved allegations, brought to light via numerous whistleblower complaints, that the lab paid kickbacks to doctors as well as marketers and relatedly billed for medically unnecessary tests.

The physician kickbacks were, as the government described them, thinly disguised as seemingly legitimate payments for physician work on a UTC-led clinical study. In fact, the government alleged, the payments were used to leverage referrals from the physicians. The clinical study work was purportedly no more than smoke and mirrors.

The UTC case, more so than that set out in the recent indictments, is likely more indicative of the sort of kickback schemes most common in the genetic testing industry, where the kickback is, at least to some degree, concealed as a seemingly legitimate form of remuneration.

In fact, the physician kickback in the UTC case is remarkably similar to that alleged by the DOJ in another multimillion dollar genetic testing fraud settlement involving Primex Clinical Laboratories LLC and its owner, where Primex purportedly concealed its kickbacks as payments to doctors for providing clinical data to the lab. Whenever there is a remuneration arrangement between a laboratory and a referral source (be it in cash or otherwise), the DOJ and relators are likely to take note.

The fact that the DOJ, in both the UTC and Primex civil cases, held individuals to account is notable. Despite robust revenue, oftentimes labs may be thinly capitalized and may move funds to individuals, trusts or shell companies to hide assets from regulators. Individual accountability helps to mitigate those concerns.

That is to say, if the DOJ, consistent with the Yates Memo, continues to hold individuals accountable, the government may be able to avoid what so often occurred during the (still ongoing) toxicology lab crackdown that started earlier this decade: Labs billed the government for billions, moved assets out of their corporate coffers, sought bankruptcy protection once regulators placed them in the crosshairs and avoided the full brunt of FCA liability.

In an earlier January FCA settlement, GenomeDx Biosciences Corp. agreed to pay $1.99 million to resolve allegations that it billed Medicare for medically unnecessary genetic tests. Unlike in Primex, there was no claim that the lab had paid kickbacks to obtain its referrals. While the DOJ has shown a preeminent focus on holding companies and individuals accountable for kickback schemes, GenomeDx serves as a warning to labs that are engaged in billing government payors for tests that are simply unnecessary, a substantial concern given the narrow set of circumstances where genetic testing has been deemed necessary by the Centers for Medicare and Medicaid Services and its contractors.

Ultimately, genetic testing schemes are likely to fall into a discrete number of fact patterns (which may overlap in the event multiple arrangements are at play).

Remuneration to Physicians

As the UTC and Primex cases show, remuneration to physicians for referrals may be disguised as superficially legitimate payments (e.g., consultation fees), services or other forms of remuneration. In some cases, a physician (or his or her practice) may have an equity (or other financial interest) in the genetic testing lab which may give rise to violations of the Anti-Kickback Statute and/or Stark Law.

Payments to Marketers

DOJ has made clear that paying commissions to independent contractors for referrals runs afoul of the Anti-Kickback Statute. In the UTC case, the lab allegedly paid independent marketers for referrals on a commission basis. The facts of UTC are not unusual. It is common practice in the genetic testing industry for labs to pay independent marketers for referrals. In such cases, both the marketers and the lab may be held liable.

Waiving Copays and Other Forms of Remunerations to Patients

Given that genetic testing services can cost upwards of $5,000 per test, patient copays tend to be substantial. In order to avoid scaring off patients via sticker shock, laboratories may waive or substantially reduce copays or similar patient payment obligations. If copay waivers (or other forms of financial assistance) are provided systemically or otherwise without legitimate consideration of a patient’s financial condition, then regulators may find that the arrangement violates the Anti-Kickback Statute.

Policies That Lead to Medically Unnecessary Tests

Practices, particularly those with a financial interest in a genetic testing lab, may institute policies that coerce their practitioners to order genetic tests when they are otherwise unnecessary. These policies may be issued under the guise of the standard of care, claiming that the practice is providing cutting-edge personalized or precision medicine services to its patients. Even in the rare case when a genetic test is necessary to identify a specific genetic variation, an entity may have a policy that pushes physicians to order additional, unnecessary tests to identify other genes.

Upcoding

In some cases, labs may be upcoding, which means billing payors for a more expensive test (or panel of tests) than that which was actually performed. In that genetic testing is relatively new, Medicare and other insurance auditors may find it difficult to adequately crack down on such practices as the auditors may not be fully familiar with the relevant coding standards.

Conclusion

If fraud hotbeds of the past are any indication (e.g., toxicology labs and compounding pharmacies), once the federal government and relators take notice of rapid growth and noncompliance in a specific corner of the health care industry, they are not likely to sit idly by as untoward amounts of government funds are siphoned off to bad actors. The recent indictments as well as the UTC, Primex and GenomeDx cases are likely just the tip of the genetic testing iceberg as whistleblowers and regulators continue to scrutinize this still growing industry.

[1] Medicare Claims Processing Manual, Ch. 16, § 120.1 (“Tests that are performed in the absence of signs, symptoms, complaints, personal history of disease, or injury are not covered except when there is a statutory provision that explicitly covers tests for screening as described.”).

Alexander M. Owens, Genetic Testing Gold Rush Gives Rise To Fraud Allegations, Law360 (November 12, 2019), https://www.law360.com/articles/1218668/genetic-testing-gold-rush-gives-rise-to-fraud-allegations

Why the European Union Whistleblower Laws Are All Doomed To Fail

Monday, June 3rd, 2019

As seen on the EU blog, LawHealthTech.com:

Member States of the European Union, over the last several years, have passed a series of so-called “Whistleblower Laws.”  These laws are being implemented allegedly to bolster anti-corruption efforts throughout Europe.  While corruption is no stranger to either side of the Atlantic, the European Union would advance their fraud fighting efforts exponentially by taking a focused look at the highly successful American False Claims Act.

France, Ireland, Italy, Greece, Germany, Netherlands, Sweden, Hungary, Lithuania, Malta, Slovakia, the United Kingdom, as well as others, have passed or amended some type of a putative whistleblower law.  Here is the issue.  None of these whistleblower statutes, in our opinion, contain the basic tenents of a strong and effective whistleblower program.  The development of the whistleblower statutes within the United States of America illustrates the bedrock elements of an effective and successful whistleblower law.

In 1986, the U.S. Congress amended the existing whistleblower statute, the False Claims Act, which was passed during the American Civil War by President Abraham Lincoln.  The 1986 Amendments to the False Claims Act included provisions that finally gave the law real fraud combatting teeth. Examining these 1986 Amendments (and even more recent Amendments) illustrates the changes needed in the European Union member States’ whistleblowing statutes.  Without such robust amendments the European Union laws will never have a real and palpable impact on fraud, waste and abuse.

The American statute, known as federal False Claims Act, or the Qui Tam Law, has at its heart the following key provisions:

  • The United States has what is known as a “qui tam[4] or whistleblower provision.
  • A whistleblower who comes forward and meets the statutory requirements is authorized by the statute to bring an action on behalf of the government and is entitled to receive a set amount of any settlement or judgment the government receives from the defendant from 15% to 30%. This strong financial incentive has, singlehandedly, made the American statute the most successful fraud, waste and abuse statute in the world.  Of this fact there is no debate.
  • The United States’ Congress has provided strong protections against professional retaliation against whistleblowers. In contrast, the European statutes contain weak non-existent or watered down versions of this protection.  In fact, some of the European laws actually put the whistleblower at risk if he or she is incorrect in their allegations. 
  • The American whistleblower statute attracts skilled lawyers who take these cases on a contingent-fee basis, award legal fees and costs to whistleblowers and their counsel, if they prevail in their claims against a defendant.
  • The American statute provides government attorneys with muscular investigative powers. For example, while the case is under seal, the government can issue document requests, written interrogatories, take depositions of key individuals, etc.  These broad investigative tools are lacking in most of the current European statutes.
  • As a result of the key amendments in 1986, the American whistleblower statute has returned more than $62 billion to the U.S. Treasury. No other whistleblower law in Europe (or anywhere) has had such success.

The European legislative bodies still do appear to be committed (culturally or legally) to the type of whistleblowing legislation that will not make a real difference for their respective countries.  Here are some of the reasons why the statutes in Europe shall continue to be as ineffective as the pre-1986 American Whistleblower Law:

  • The European statutes do not truly embrace the concept that whistleblowers need to be encouraged to come forward to expose corruption inside large, well regarded institutions. The majority of the European laws do not contain any financial reward for successful whistleblowers.  Most importantly, none of the European statutes have a strong financial reward that would balance the risks against the rewards.  The European laws seem to go through the motions of supporting, yet not incentivizing, whistleblowers.
  • There is no clear and distinct prosecutorial entity in charge of effectively enforcing the individual European statutes.
  • Many of the European statutes lack strong protections for whistleblowers who come forward and risk their careers and livelihood. While there is a lot of “lip service,” there is no economic insurance that they will be protected.

While Americans and Europeans have shared and adopted approaches to governance over the centuries, their differences in efforts to curtail fraud, waste and abuse through whistleblower statutes is considerable.  Europe need look no further than its young sister state across the Atlantic for lessons that may be worth billions of dollars in recoveries.

New York Doctor Sentenced to Four Years in $100 Million Lab Kickback Scheme

Friday, June 1st, 2018

The beat goes on…

According to a May 31, 2018 filing in New Jersey federal court, Dr. Thomas Savino of Staten Island was sentenced to four years imprisonment and three years’ supervised release, and was ordered to pay a $100,000 fine and forfeit $27,500 for his part in the Biodiagnostic Laboratory Services fraud. Evidence produced at trial last fall showed that Dr. Savino received at least $25,000 from the lab in exchange for his referrals, which generated approximately $375,000 for the lab. In October 2017, Savino was convicted of multiple offenses for his role in the kickback scheme, including conspiracy to violate the anti-kickback statute and wire fraud. All told, the scheme resulted in $100 million in false claims to government and private health care programs.

With Dr. Savino’s conviction and sentencing, the case has resulted in 53 convictions, including 38 doctors. Earlier this month, four former Biodiagnostic sales employees also received prison sentences ranging from 21 to 41 months, and a fifth ex-employee received three-years’ probation for their part in the kickback scheme.

Back in June of 2016, Biodiagnostic pled guilty and was required to forfeit its assets. In December 2017, the founder of the lab company, a former nurse, testified during the government’s prosecution. He described how he built a $150 million business from scratch using a marketing plan built primarily on bribing doctors to use his lab. The physicians involved were bribed with luxury automobiles, impossible-to-get concert tickets, and trips to the Caribbean and the Super Bowl in private jets, as well as prostitutes and strippers at high-end gentlemen’s clubs. Although 40 physicians were charged, the lab owner testified that he paid off more than 100 physicians to keep referrals flowing to his lab.

The scheme came to light when one of the doctors receiving kickbacks gave an old iphone to a girlfriend. After their breakup, she discovered texts revealing the bribe scheme and provided them to authorities.

Ex-BlueWave Execs and Former HDL CEO Hammered with $111 Million Judgment

Wednesday, May 30th, 2018

What Happened?

On May 23, 2018, the U.S. District Court for the District of South Carolina, Judge Richard M. Gergel, imposed a $111 million judgment against former Health Diagnostics Laboratory (“HDL”) CEO, Latonya Mallory, and former BlueWave Healthcare Consultants (“BlueWave”) owners, Floyd Dent III and Robert Bradford Johnson. Mallory, Dent, and Johnson, who had been found liable by a jury in January for violations of the False Claims Act (“FCA”), argued that the judgment amounts to a violation of the Due Process Clause and the Eight Amendment’s prohibition on excessive fines. The court rejected these arguments.

The Litigation Rundown

An amended qui tam Complaint filed by Relators Scarlett Lutz and Kayla Webster initially named Dent, Johnson, and Mallory as co-conspirators in a nationwide scheme where BlueWave would “market” laboratory tests performed by HDL and another lab, Singulex, Inc., to physicians by offering them sham process and handling fees for each test ordered. The realtors were represented by Marc S. Raspanti, Pamela C. Brecht, and Douglas E. Roberts of Pietragallo Gordon Alfano Bosick & Raspanti; and William J. Tuck, P.A.

The United States intervened in the Lutz-Webster Complaint, and two complaints filed by other relators, and the claims against Dent, Johnson, and Mallory proceeded to trial in Charleston, South Carolina, after HDL and Singulex settled the claims against them. After intervention and at the government’s request, the Court froze numerous assets – including real property and bank accounts – belonging to Dent and Johnson.

On January 31, 2018, the jury found Dent, Johnson, and Mallory responsible for submitting or causing to be submitted 35,074 false claims that were tainted by the sham fees and for which federal health care programs paid $16,601,591. Because the FCA calls for the trebling of damages as well as the imposition of penalties for each claim submitted, and because the government sought civil penalties for some of the false claims, Dent, Johnson, and Mallory’s obligation climbed into nine figures.

Faced with a massive financial obligation, Dent, Johnson, and Mallory contended that the judgment would violate the Excessive Fines Clause of the Eighth Amendment. Following “well-settled” precedent, the district court rejected that argument in a written opinion and order, noting that punitive damages and penalties are not typically viewed as “fines,” as that term is used in the Eighth Amendment. Moreover, even if the Excessive Fines Clause were applicable to civil FCA judgments, “substantial deference” should be afforded to the legislature, which prescribes penalties for each false claim submitted. Here, the United States was circumspect in terms of the penalties it sought, opting to request the minimum $5000 per claim and only then for some of the false claims submitted. Thus, there was nothing grossly disproportionate about the judgment.

Dent, Johnson, and Mallory also raised due process objections under the Fifth Amendment based on the alleged excessiveness of the judgment. But the Court found that the statutorily determined ratio of punitive damages to compensatory damages passed constitutional muster. The Court imposed the $111 million judgment, for which Dent, Johnson, and Mallory will be jointly and severally liable.

The Take Away

This judgment serves as a stark reminder about the severity of consequences facing those defendants who go to trial and are found liable for FCA violations. Johnson, Dent, and Mallory were found responsible for submitting, or causing the submission of, false claims that cost the government $16 million. That obligation ballooned into more than $111 million due to the FCA’s provisions regarding treble damages and fines and penalties.

When Is a Kickback Not a Kickback? Third Circuit Says It Must Be Linked to Specific False Claim

Thursday, February 1st, 2018

What Happened?

In affirming the district court’s entry of summary judgment in favor of Accredo Health Group, Inc., and its co-defendants, the U.S. Court of Appeals for the Third Circuit held that a plaintiff alleging a False Claims Act (“FCA”) violation based on an anti-kickback theory must show that (1) a particular patient was exposed to a kickback-tainted referral, and (2) a provider submitted a claim for reimbursement pertaining to that patient.

The Rundown

In United States ex rel. Greenfield v. Medco Health Solutions, Inc., et al., the relator sued Accredo Health Group, a specialty pharmacy that provides home health care for hemophilia patients, and its affiliates (collectively, “Accredo”). Accredo made donations to numerous hemophilia-related charities, two of which, according to the relator’s allegations, recommended Accredo as a provider for hemophilia patients. Relator Greenfield moved for summary judgment before the district court, arguing that Accredo’s donations-for-referrals scheme violated the Anti-Kickback Statute (“AKS)), 42 U.S.C. § 1320a-7b(b), and that the scheme ran afoul of the FCA, 31 U.S.C. § 3729 et seq., because (1) some of the referrals were directed towards Medicare patients, and (2) when submitting Medicare claims for payment, Accredo falsely certified that it had complied with the AKS. Accredo cross-moved for summary judgment on the ground that the record lacked evidence that any Medicare patient had purchased prescriptions because of Accredo’s donations to specific charities.

Without reaching the question whether Greenfield had established a kickback scheme, the district court granted Accredo’s motion for summary judgment, while denying the relator’s motion for the same relief.  It held that an FCA claim based on an anti-kickback theory requires the plaintiff to show that, as a result of the AKS violation, the defendant received payment from the federal government in violation of the FCA. Greenfield could not do that, in the Court’s view, because there was no evidence that any Medicare patient chose Accredo due to its charitable donations.

Greenfield appealed, and the U.S. Court of Appeals for the Third Circuit affirmed the district court’s grant of summary judgment in favor of Accredo. But it rejected the district court’s imposition of a “but-for” causation requirement. The Court analyzed the language of the AKS, amended in 2010 to provide that “a claim that includes items or services resulting from a violation of [the statute] constitutes a false of fraudulent claim for the purposes of [the FCA].”  According to the Court, the “resulting from” language was too broad to require proof that the Medicare patient would not have chosen the provider but for the kickback. Were the district court’s interpretation correct, the both AKS drafters’ intention to strengthen the government’s ability to punish fraudulent activities, and its revisers’ intention to bolster whistleblower actions based on medical care kickbacks would have been thwarted.

However, the Court held that a plaintiff must still provide evidence of the actual submission of a false claim to prevail at trial.  Demonstrating that a kickback scheme exists is not enough; a plaintiff must establish that the underlying medical care is connected to the breach of the AKS.  Because Greenfield could point to no “record evidence that shows a link between the alleged kickbacks and the medical care received by at least one of Accredo’s . . . federally insured patients,” the district court correctly entered summary judgment for Accredo.

The Take Away

The Court rejected both (1) Greenfield’s position that that taint of a kickback scheme is enough to infect all referrals to Medicare patients, and (2) Accredo’s argument – adopted by the district court – that a plaintiff must prove that federal beneficiaries would not have used the relevant services absent the kickback scheme. Its middle-ground position, requiring evidence that shows a “link” between kickbacks and care, is sure to spawn future litigation regarding how strong and of what character that connection must be.

4th Circuit Finds Misrepresentations about Medical Necessity for Urinalysis Testing are Material

Friday, November 3rd, 2017

The United States Court of Appeals for the Fourth Circuit has affirmed a District Court’s judgment on a husband and wife’s health care fraud convictions.  The Appellate Court found that medical necessity was a “critical prerequisite to payment” and insurers would not have knowingly paid for medically unnecessary urine drug tests.

Joseph Webb and Beth Palin, husband and wife, had been convicted of billing Medicare and private insurers for unnecessary urine drug tests.  Palin owned Mountain Empire Medical Care, an addiction medicine clinic. Palin also owned Bristol Laboratories, which processed urine drug tests ordered by physicians at her addiction medicine clinic and elsewhere.  Webb assisted his wife in the operation of both of these facilities.  Bristol Laboratories performed two types of urine tests: a basic, inexpensive “quick-cup” tests and a more sophisticated and expensive “analyzer” test.   Most referring physicians did not designate a specific type of test.  Webb and Palin decided for them.  While uninsured patients received the “quick-cup” test, insured patients routinely received both the “quick-cup” and the “analyzer” test.  Bristol Laboratories billed both government payors and private insurers for the more expensive “analyzer” test.  After a bench trial, they were found guilty of health care fraud.  Once the Supreme Court issued their ruling in Escobar, however, the couple moved for an acquittal or a new trial.

The couple attempted to overturn their convictions by arguing that Escobar has established a new materiality standard that applies to all criminal fraud statutes.  They further argued that under the new standard, their misrepresentations were not material.  The 4th Circuit Court disagreed that a new materiality standard has been established: “We do not believe the Supreme Court intended to broadly ‘overrule’ materiality standards that had previously applied in the context of criminal fraud. And we doubt the Court’s examination of how materiality applies under ‘implied false certification’ FCA cases transfers to all cases charging fraud, or even all cases charging health care fraud.”

Despite noting that they doubt that a new materiality standard applies, the 4th Circuit panel considered the argument that a new standard had been established.  The Court found that there was ample evidence to show that the insurers would not have knowingly paid for medically unnecessary tests.  The Court then applied the Escobar materiality standard, stating, “If materiality ‘looks to the effect on the likely or actual behavior of the recipient of the alleged misrepresentation,’ as provided in Universal Health, the misrepresentations here were material: insurers would not have paid for the sophisticated tests had they known those tests were unnecessary.”  The Court found that even if the Escobar standard applied, the couple’s misrepresentations were material.  Additionally, the Court found that any error on the part of the District Court was harmless because the verdict would have been the same absent the error.

All of Webb and Palin’s arguments fell short, and the 4th Circuit affirmed their convictions for health care fraud.

Georgia-based Hospital Group to Pay Over $513 Million to Resolve Civil and Criminal Allegations Related to Illegal Payments for Patient Referrals

Wednesday, October 19th, 2016

On Monday, the DOJ announced the resolution of criminal allegations and a False Claims Act (“FCA”) lawsuit a relating to a scheme to defraud the United States and obtain kickbacks in exchange for patient referrals.  A major U.S. hospital chain, Tenet Healthcare Corporation and two subsidiaries, Atlanta Medical Center, Inc. and North Fulton Medical Center, Inc., will pay over $513 million pursuant to a series of agreements, including a civil settlement agreement, non-prosecution agreement, and plea agreements:

FCA settlement:  Tenet Healthcare and related entities – described in the settlement as “the Tenet Entities – agreed to pay $368 million to the federal government and to Georgia and South Carolina to resolve claims brought by a Georgia whistleblower.  The FCA suit was filed in the Middle District of Georgia and claimed that Tenet Healthcare paid bribes and kickbacks to pre-natal clinics to unlawfully refer Medicare and Medicaid patients to its hospitals.  The whistleblower will receive $84 million under the agreement.  The agreement stated that the Tenet Entities denied any liability regarding the false claims allegations.

Non-prosecution agreement:  Tenet HealthSystem Medical Inc., the corporate parent of Tenet Healthcare, entered into a non-prosecution agreement (“NPA”) with DOJ based on similar allegations to those within the FCA case.  The NPA allows the two companies to avoid criminal prosecution in exchange for following the agreed-upon terms.  The criminal allegations at the heart of the NPA focused on an alleged conspiracy to defraud the United States and to violate the Anti-Kickback Statute, which bars illegal payments that induce patient referrals for services paid for by federal health care programs.  Under the NPA, Tenet HealthSystem and Tenet Healthcare will avoid criminal prosecution if they cooperate with the government’s prosecution and strengthen their internal controls, including their compliance and ethics programs.  The NPA is effective for three years, although it may be extended for an additional year if necessary.

Plea agreements:  Two subsidiaries of Tenet Healthcare, Atlantic Medical Center and North Fulton Medical Center, agreed to plead guilty to a criminal information for their role in the conspiracy, as referenced above, to defraud the United States and violate the Anti-Kickback Statute.  Under the plea agreements, the two healthcare will forfeit over $145 million to the United States, collectively representing the amount paid to the two entities by the federal Medicare and Georgia Medicaid programs for services paid to patients referred as part of the conspiracy.

Additional information, including the FCA settlement agreement, NPA, and criminal information can be found here.

$34.8 Million to be Paid by Respironics for False Claims Related to Sale of Sleep Apnea Masks

Thursday, March 24th, 2016

Respironics is to pay $34.8 million for alleged False Claims Act violations related to the sale of sleep masks designed to treat sleep apnea.  Allegedly Respironics, a Murrysville, PA based company, paid kickbacks in the form of free call center services to durable medical equipment (DME) companies that purchased the masks.  The DME companies; otherwise, would have had to pay a monthly fee based upon the number of patients who used the masks manufactured by a Respironics competitor.  The alleged conduct occurred between April 2012 and November 2015.  Approximately $34.14 million will be paid to the federal government and about $660,000 will be paid to various state governments based on their Medicaid program participation.

Dr. Gibran Ameer initially brought the lawsuit under the False Claims Act qui tam provisions.  Dr. Ameer had worked for different DME companies.  He will receive $5.38 million out of the federal government’s share of the settlement.  The Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s office of the District of South Carolina, and HHS Office of Counsel to the Inspector General and Office of Investigations and the National Association of Medicaid Fraud Control Units all worked together to bring about the settlement in this lawsuit.

https://www.justice.gov/opa/pr/respironics-pay-348-million-allegedly-causing-false-claims-medicare-medicaid-and-tricare

2014 Whistleblower Recoveries

Tuesday, March 10th, 2015

In 2014, the total whistleblower recoveries amounted to just shy of $3 billion, $2.2 billion (73 percent) of which were in the health care arena.

When the Department of Justice announces a False Claims Act recovery, they put the total recovery into the headline (the total amount that the fraudster is paying as a result of the FCA action), this includes state Medicaid recoveries and Criminal penalties triggered by FCA investigations.  However, when the DoJ announces their recoveries at the end of the year they leave the state and criminal recoveries off the table.

An example may be seen in the Johnson & Johnson matter announced in November 2013.  The Department of Justice initial press release states that $2.2 billion was recovered in this matter, but nearly $500 million of the $2.2 billion was a criminal penalty and over $500 million went to states.  Half of the total recovered is actually counted in the federal FCA statistics.

Ultimately, there is no evidence that the total fraud recoveries in the health care arena are going down.  FCA actions were very high in 2014, almost entirely due to non-qui tam banking cased that are listed in the non-HHD and non-DOD part of the report.  The total FCA number jumped from $422 million (FY 2013) to $3.3 billion (FY 2014), of which $2.6 billion was brought in from non-qui tam cases.

US Settles False Claims Act Allegations Against ev3 for $1.25 Million

Monday, February 9th, 2015

The Justice Department announced that it has reached a $1.25 million settlement with ev3, a medical device manufacturer base in in Minnesota.   Ev3 formerly was known as Fox Hollow Technologies. A lawsuit filed under the whistleblower provision of the False Claims Act alleges that between 2006-2007, Fox Hollow induced 12 hospitals in 9 states to admit patients who were undergoing elective atherectomy procedures.   This minimally invasive procedure removes atherosclerosis and opens up coronary arteries, thereby increasing blood flow.   It is usually performed on an outpatient basis.  At that time, Fox Hollow sold the Silver Hawk Plaque Excision System, a device that was used in these procedures.  In order to increase hospital purchases of this device, Fox Hollow convinced the 12 hospitals to admit the atherectomy patients.  The hospitals subsequently submitted claims for unnecessary admissions and received higher reimbursements from Medicare for procedures that should have been performed in an outpatient facility. For more information, please click here.