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Premiertox Pays United States And Tennessee $2.5 Million To Resolve False Claims Act Lawsuit

The United States Attorney for the Western District of Kentucky announced yesterday that PremierTox 2.0, Inc. has paid $2.5 million to resolve alleged violations of the False Claims Act.  PremierTox is a company that provides drug urine screening services to citizens of Kentucky and Tennessee.  The government alleged that PremierTox submitted false claims when billing Medicare, TennCare and Kentucky Medicaid for drug urine screening services. PremierTox previously did business in Tennessee under the name Nexus.

“Losses caused by health care fraud amount to tens of billions of dollars every year,” said U.S. Attorney John Kuhn, of the Western District of Kentucky. “Often those losses are passed along to consumers in the form of increased costs. For that reason, my office will work with federal, state, and local law enforcement to uncover these activities and recover every dollar.”

The settlement resolves the government’s allegations that PremierTox and Nexus submitted three types of false claims during the period of September 2011 through June 2014. During that period, PremierTox was under different, former ownership and management. The government alleged that PremierTox had a swapping arrangement, in which Nexus gave below cost discounts on its urine drug screen tests to patients in Tennessee without insurance, in exchange for physicians’ referring their patients with Medicare or TennCare coverage to Nexus.  The government also contended that, in Tennessee, Nexus submitted excessive claims to Medicare and TennCare for laboratory testing that was beyond what was medically reasonable and necessary.  In addition, the government claimed that, in Kentucky, PremierTox provided point of care testing cups to medical offices free of charge to induce those providers to use PremierTox’s services.

Under the settlement agreement, PremierTox paid a total of $2,500,000.  Of that amount, $2,125,000 covers the conduct in Tennessee, and $325,000 covers the conduct in Kentucky.  The United States will receive $1,757,300 under the settlement, and Tennessee will receive $325,200.

“Medically unnecessary lab tests and financial incentives from labs to doctors in exchange for referrals are costing the taxpayers millions of dollars,” said Derrick L. Jackson, Special Agent in Charge at the U.S. Department of Health and Human Services, Office of Inspector General in Atlanta. “This settlement is one of many that are sending a strong message to the lab industry that they need to clean up their act.”

The allegations resolved by today’s settlement were originally raised in two lawsuits filed against PremierTox in Tennessee and Kentucky under the qui tam, or whistleblower provision of the False Claims Act.  This provision allows private citizens to bring civil suits on behalf of the government and to share in any recovery.

The lawsuit in Tennessee was filed by a former office manager of a pain clinic in Cookeville. The relator in this case will receive $361,250.  The relator who brought the lawsuit in Kentucky is the former CEO of PremierTox and will receive and $56,250.

The Tennessee lawsuit remains pending against several other defendants whom the United States and Tennessee allege violated the False Claims Act and the Tennessee Medicaid False Claims Act.

This case was investigated by the U.S. Department of Health & Human Services Office of Inspector General and the Tennessee Bureau of Investigation Medicaid Fraud Control Unit.  The United States is represented in these cases by Assistant U.S. Attorneys Ellen Bowden McIntyre for the Middle District of Tennessee and Ben Schecter of the Western District of Kentucky.  The State of Tennessee is represented by Assistant Attorney General Phillip Bangle.

The two cases are docketed as United States ex rel. Norris v. Anderson, No. 3:12-cv-00035 (M.D. Tenn.) and United States ex rel. Duncan v. Nexus Lab, Inc., No. 1:14-cv-89-R (W.D. Ky.).  The claims settled by this agreement are allegations only, and there has been no determination of liability.

If you know of or suspect health care fraud, contact us now.

 

United States Settles False Claims Act Allegations Against 21st Century Oncology for $34.7 Million

The Department of Justice announced yesterday that 21st Century Oncology Inc., the nation’s largest physician led integrated cancer care provider and its wholly owned subsidiary South Florida Radiation Oncology LLC, have agreed to settle allegations that they performed and billed for procedures that were not medically necessary.  21st Century is headquartered in Fort Myers, Florida, and has offices in 16 states.

The settlement relates to defendants use of a medical procedure – called the Gamma function – to measure the exit dose of radiation from a patient after receiving radiation treatment.  The United States alleged that the defendants knowingly and improperly billed for this procedure under circumstances where the procedure served no medically appropriate purpose.  For example, the government alleged that the procedure was performed by physicians and physicists at 21st Century Oncology locations who were not properly trained to interpret and utilize the Gamma function results.  The government also alleged that the defendants billed for this procedure when no physician reviewed the Gamma function results until seven or more days after the last day patients received radiation treatment therapy.  Finally, the government alleged that the defendants billed for the procedure when no Gamma result was available due to technical failures in the imaging equipment.

“Today’s settlement demonstrates our unwavering commitment to protect the Medicare trust fund against unscrupulous providers,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Providers who waste taxpayer dollars by billing for unnecessary services, including services that are not used or improperly performed, will face serious consequences.”

“The U.S. Attorney’s Office is committed to taking the steps necessary to protect Medicare, TRICARE, and other federal health care programs from fraud,” said U.S. Attorney A. Lee Bentley III for the Middle District of Florida.  “Healthcare providers may bill for new technologies only when they have been proven to be useful and when individual physicians and staff have been trained to use them properly.”

This lawsuit was originally filed under the qui tam or whistleblower provisions of the False Claims Act by Joseph Ting, a former physicist at South Florida Radiation Oncology.  Under those provisions, a private party, known as a relator, can file an action on behalf of the United States and receive a portion of the recovery.  Ting will receive more than $7 million.

“The waste of health care program dollars will not be tolerated,” said Special Agent in Charge Shimon R. Richmond for the Health and Human Services (HHS) Office of the Inspector General.  “Providers at 21st Century Oncology have agreed to settle claims that in some instances they performed tests that were not only medically unnecessary, but that no one had been trained to properly interpret, thereby allegedly causing the taxpayers to pay for useless tests.”

This past December, 21st Century Oncology LLC, a wholly owned subsidiary of 21st Century Oncology Inc., paid $19.75 million to settle allegations that it violated the False Claims Act by billing for medically unnecessary laboratory urine tests and for encouraging physicians to order these tests by offering bonuses based in part on the number of tests the physicians referred to its laboratory.

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $27.4 billion through False Claims Act cases, with more than $17.4 billion of that amount recovered in cases involving fraud against federal health care programs.

“This settlement highlights the commitment of the Defense Criminal Investigative Service (DCIS) and its law enforcement partners to protect the integrity of TRICARE, the Department of Defense health care program that serves our warfighters, their family members, and military retirees,” said Special Agent in Charge John F. Khin of DCIS Southeast Field Office.  “With DoD’s limited resources and budgets, DCIS must continue to aggressively investigate fraud, waste and abuse to preserve and recover precious taxpayer dollars for our most vulnerable programs.”

This matter was handled by the U.S. Attorney’s Office for the Middle District of Florida, with assistance from the Civil Division’s Commercial Litigation Branch, the Department of Health and Human Services Office of Inspector General (HHS/OIG) and the Defense Criminal Investigative Service (DCIS).

The claims resolved by this settlement are allegations only, and there has been no determination of liability.  The lawsuit against the defendants was filed in the U.S. District Court for the Middle District of Florida and is captioned United States ex rel. Ting v. 21st Century Oncology and South Florida Radiation Oncology.

If you know of or suspect Medicare fraud, contact us now.

Former Owner of Florida Home Health Care Companies Agrees to Pay $1.75 Million to Resolve Kickback and False Claims Act Allegations

The Justice Department announced yesterday that Mark T. Conklin, the former owner, operator and sole shareholder of Recovery Home Care Inc. and Recovery Home Care Services Inc. (collectively RHC), has agreed to pay $1.75 million to resolve a lawsuit alleging that he violated the False Claims Act by causing RHC to pay illegal kickbacks to doctors who agreed to refer Medicare patients to RHC for home health care services.  Conklin sold the RHC companies to National Home Care Holdings LLC, on Oct. 9, 2012.

“Individuals who seek to increase their profits by providing physicians with illegal inducements will be held personally accountable,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “We will continue to identify, investigate and, where appropriate, sue individuals and corporations that misuse funds meant to provide critical medical services for beneficiaries of federal health care programs.”

From 2009 through 2012, Conklin spearheaded a scheme whereby RHC, headquartered in West Palm Beach, Florida, allegedly paid dozens of physicians thousands of dollars per month to serve as sham medical directors who supposedly conducted quality reviews of RHC patient charts.  According to the government’s lawsuit, the physicians in many instances performed little or no work, but nevertheless received thousands of dollars from RHC.  The government’s complaint contended that these payments were, in fact, kickbacks intended to induce the physicians to refer their patients to RHC, in violation of the Anti-Kickback Statute and the Stark Law.

These laws are intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives.  The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by federal health care programs, including Medicare.  The Stark Law forbids a home health care provider from billing Medicare for certain services referred by physicians who have a financial relationship with the entity.   A person who knowingly submits, or causes the submission, to Medicare of claims that violate either the Anti-Kickback Statute or the Stark Law is also liable for treble damages and penalties under the False Claims Act.

“Inducements of the type at issue in this case are designed to improperly influence a physician’s independent medical judgment,” said U.S. Attorney A. Lee Bentley, III for the Middle District of Florida.  “This lawsuit and today’s settlement evidence our office’s ongoing efforts to safeguard federal health care program beneficiaries from the effects of such illegal conduct.”

“Home health agency owners who seek to boost profits by paying kickbacks to physicians in exchange for patient referrals will instead pay for their improper conduct at the settlement table,” said Special Agent in Charge Shimon R. Richmond of U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).  “We will continue to crack down on such illegal, wasteful kickback schemes, which can undermine impartial medical judgment and corrode the public’s trust in the health care system.”

The United States previously reached a settlement with RHC’s purchaser, National Home Care Holdings, on March 9, 2015, for $1.1 million.

The settlement with Conklin, which is subject to approval by the Bankruptcy Court for the Southern District of Florida, concludes a lawsuit originally filed by Gregory Simony, a former RHC employee, under the qui tam, or whistleblower,provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.  The act also allows the government to intervene and take over the action, as it did in part in this case.  Simony will receive up to $315,000 of the proceeds of the Conklin settlement.

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $27.4 billion through False Claims Act cases, with more than $17.4 billion of that amount recovered in cases involving fraud against federal health care programs.

The settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the U.S. Attorneys’ Offices for the Middle District of Florida and the Southern District of Florida and the HHS-OIG.

The case is captioned United States ex rel. Simony v. Recovery Home Care, et al., Case No. 8-12-cv-2495-T-36TBM (M.D. Fla.).  The claims resolved by the settlement are allegations only and there has been no determination of liability.

If you know of or suspect home health care fraud, contact us now.

Lockheed Martin Agrees To Pay $5 Million To Settle Alleged Violations Of The False Claims Act And The Resource Conservation And Recovery Act

The Department of Justice announced on Monday that Lockheed Martin Corporation and subsidiaries Lockheed Martin Energy Systems and Lockheed Martin Utility Services (collectively, Lockheed Martin) have agreed to pay the United States $5 million to resolve allegations that they violated the Resource Conservation and Recovery Act (RCRA) and, in misrepresenting their compliance with RCRA to the Department of Energy (DOE), knowingly submitted false claims for payment under their contracts with DOE to operate the Paducah Gaseous Diffusion Plant in Paducah, Kentucky, the Justice Department announced today.  Headquartered in Bethesda, Maryland, Lockheed Martin is a global security, aerospace, and information technology company that provides energy, environmental, and other services to government and commercial customers.

“We depend on the private sector to provide services critical to the government’s energy needs and to provide those services by means that are environmentally sound,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “As the settlement announced today demonstrates, the department will vigorously pursue all appropriate remedies to ensure that those who provide these vital services do so honestly and safely and in accordance with the law.”

“This settlement reflects our commitment to pursuing companies that violate the hazardous waste laws, and to securing a fair recovery of civil penalties for the people of the United States,” said Assistant Attorney General John Cruden, head of the Justice Department’s Environment and Natural Resources Division.  “The $1 million in RCRA civil penalties that the defendants are paying under this settlement is significant and is appropriate for the violations the United States has alleged.”

The government’s lawsuit alleged that Lockheed Martin violated RCRA, the statute that establishes how hazardous wastes must be managed, by failing to identify and report hazardous waste produced and stored at the facility, and failing to properly handle and dispose of the waste.  The government further alleged that this conduct resulted in false claims for payment under Lockheed Martin’s contracts with the Department of Energy.

Of the $5 million settlement amount, Lockheed Martin will pay $4 million to resolve the government’s False Claims Act allegations and its subsidiaries (Lockheed Martin Energy Systems and Lockheed Martin Utility Services) will each pay $500,000 – $1 million total – in RCRA civil penalties.

“Government contractors are required to follow the same federal laws that apply to everyone else,” said U.S. Attorney John E. Kuhn, Jr. for the Western District of Kentucky.  “These companies do not get a pass on compliance, especially when their responsibilities include managing and disposing of hazardous waste.  Today’s settlement should serve as a reminder that my office and the Department of Justice will pursue all credible allegations of false claims and of environmental regulatory violations.”

“Managing hazardous waste is important, and this case makes clear EPA’s commitment to upholding laws that protect communities where waste is disposed,” said EPA Regional Administrator Heather McTeer Toney of EPA Region 4, the Southeast region.

Lockheed Martin operated the Paducah Gaseous Diffusion Plant under contracts with the Department of Energy and a government corporation, the U.S. Enrichment Corporation, from 1984 to 1999.  During that time, Lockheed Martin was responsible for the facility’s uranium enrichment operations.  Enriching uranium increases the proportion of uranium atoms that can be used to produce nuclear fuel for weapons and civilian energy production.  As the name of the plant suggests, the process used was called “gaseous diffusion.”

In addition to uranium enrichment, Lockheed Martin was responsible for environmental restoration, waste management, and custodial care at the site, which occupies 3,500 acres in McCracken County, Kentucky.  Uranium enrichment operations ceased at the plant in 2013.  The government is working with other contractors to remediate contamination at and near the site consistent with the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

The settlement resolves two lawsuits filed under the qui tam, or whistleblower, provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery.  The lawsuits were filed by the Natural Resources Defense Council, Inc. and several former employees of Lockheed Martin who worked at the Paducah facility.  The United States partially intervened in the lawsuits, which were then consolidated into one action.  The whistleblowers will collectively receive $920,000 from the United States’ portion of the settlement.

The case was a coordinated effort of the U.S. Attorney’s Office for the Western District of Kentucky, the Civil Division’s Commercial Litigation Branch, the Environment and Natural Resources Division’s Environmental Enforcement Section, the U.S. Environmental Protection Agency, the Department of Energy, and the Department of Energy Office of Inspector General.

The case is captioned United States, ex rel. John David Tillson, Natural Resources Defense Council, Inc., et al. v. Lockheed Martin Corp., et al., Civil Action No. 5:99CV00170-GNS (W.D. Ky.).  The claims resolved by this settlement are allegations only; there has been no determination of liability.

If you know of or suspect similar types of fraud, contact us now.

Government Files False Claims Act Case Against Physician

On Wednesday, U.S. Attorney Paul J. Fishman announced that the government has filed a complaint against a Union County, New Jersey, doctor and his medical practice companies for knowingly submitting millions of dollars in false claims to Medicare and Medicaid for thousands of diagnostic tests that were never performed and for physical therapy services performed by unqualified personnel.

The civil complaint, filed today in Newark federal court, charges Dr. Labib E. Riachi, 47, of Westfield, New Jersey, and two companies that he owns and operates, Riachi, Inc. and Center for Advanced Pelvic Surgery, LLC, both based in Westfield, with violating the False Claims Act, among other illegal conduct.

According to the complaint:

The defendants routinely billed Medicare and Medicaid for anorectal manometry, an invasive diagnostic test, and electromyography, another diagnostic test, even though most of the tests were never performed. In addition, the defendants submitted claims to Medicare for physical therapy services that should not have been paid because they were not performed by a qualified therapist. This scheme resulted in millions of dollars of reimbursement that would not have been paid but for the defendants’ misconduct.

If you know of or suspect Medicare fraud, contact us now.

Rose Radiology to pay almost $9 million to settle false billing allegations

Rose Radiology Centers Inc. will pay $8.71 million to the government to settle allegations that it violated the False Claims Act by billing federal health care programs for unnecessary radiology procedures.  The company has about a dozen offices in the Tampa Bay area. It’s also the “official” radiology practice for the Tampa Bay Rays and Tampa Bay Lightning.

The settlement resolves several allegations involving medical care standards, false billings and “breaches of trust,” according to a news release from the U.S. Attorney’s Office.

“There is no room for such practices in our public health care programs,” U.S. Attorney Lee Bentley said in the release.

The settlement deals with a lawsuit filed by two whistle-blowers under the False Claims Act, which allows private parties to bring suit on behalf of the government and to share in any recovery.

The whistle-blowers will receive a combined $1.7 million as their share of the recovery in this case. Reached by phone, one of the whistle-blowers declined to comment Friday.

The lawsuit said Rose Radiology improperly billed for radiology procedures referred by chiropractors, which Medicare does not pay for.

To circumvent this prohibition, the release said, Rose Radiology accepted orders from chiropractors and billed for them as if the tests were actually ordered by a Rose Radiology-employed physician.

The company was founded in 2001 by radiologist Manuel S. Rose, according to its website, which says the company was created with the philosophy that it “should be owned, managed and staffed by licensed board certified radiologists, thus avoiding conflicts of interest.” It touts being one of the few practices of its kind to be owned by a doctor.

The company also was accused of performing and billing for radiology procedures that were never actually ordered by the patients’ treatment providers and of sending claims to Medicare for radiology services that were not performed at facilities authorized as Medicare providers.

“Not only do the kinds of frauds that were alleged in this case rob Medicare of needed funds, they threatened the health of elderly and disabled Americans,” said Shimon Richmond, special agent in charge for the Health and Human Services Office of the Inspector General.

The center also was accused of giving kickbacks to referring physicians.

It was alleged, the release said, that the center provided key referral services incentives such as lunches, gift cards and tickets to events in exchange for business.

If you know of or suspect healthcare fraud, contact us now.

CenterLight Healthcare Pays $47.6 Million to Settle Medicaid Fraud Claims

On Thursday, Preet Bharara, the United States Attorney for the Southern District of New York, and Scott J. Lampert, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General’s New York Region (“HHS-OIG”), announced that the United States has settled civil fraud claims under the False Claims Act against CenterLight Healthcare, Inc., and CenterLight Health System, Inc. (collectively, “CenterLight”), for the enrollment of ineligible members in the CenterLight Healthcare managed long-term care plan (“CenterLight MLTCP”).  CenterLight improperly billed the Medicaid program for 1,241 members who attended or were referred by social adult day care centers (“SADCCs”) and whose needs did not meet the criteria of the managed care plan.  The settlement resolves claims that CenterLight engaged in improper marketing practices to enroll members through SADCCs and induced such members to use SADCCs as the members’ primary source of personal care services.  CenterLight continued to seek and obtain monthly capitation payments for members well after the New York State Department of Health issued guidance in early 2013 explicitly stating that an individual’s attendance at SADCCs does not satisfy the MLTCP eligibility standard.

Under the terms of the settlement approved yesterday by United States District Judge Lewis A. Kaplan, CenterLight must pay a total of $46,751,086.74 to the Medicaid Program, $18,700,434.70 of which will go to the United States.  In addition, CenterLight is required to:

  • Comply with all contractual and regulatory requirements governing the enrollment, assessment, re-assessment, and dis-enrollment of CenterLight MLTCP members.
  • Credential only SADCCs that are properly certified and capable of providing community-based personal care services consistent with regulatory requirements.
  • Monitor SADCCs in its provider network to ensure that they furnish the community-based personal care services called for under CenterLight MLTCP member care plans and operate in compliance with applicable regulations.
  • Prohibit marketing practices that are directed at enrolling CenterLight MLTCP members through SADCCs.

Manhattan U.S. Attorney Preet Bharara said:  “CenterLight Healthcare improperly received millions of Medicaid dollars by enrolling ineligible members into its managed care plan.  With this settlement, CenterLight now has admitted to its conduct and will pay over $46 million.  We are committed to holding health care providers accountable if they wrongfully seek and receive federal funds, and we thank HHS’s Office of the Inspector General and the New York State Attorney General’s Office for their assistance.”

HHS-OIG Special Agent in Charge Scott J. Lampert said:  “CenterLight’s conduct compromised the integrity of the Medicaid program by enrolling beneficiaries in a plan for which they were not eligible.  HHS-OIG is committed to holding providers accountable for their practices, and the manner in which care is provided.”

Pursuant to the Medicaid managed long-term care program, health care providers, such as CenterLight, are responsible for arranging and managing long-term health care services offered to Medicaid beneficiaries.  In exchange, providers receive a monthly capitation payment of approximately $3,800 for each beneficiary enrolled in the health care plan.  MLTCPs offer a variety of services, including assistance with activities of daily living, care management services, skilled nursing services, physical therapy, occupational therapy, speech therapy, nursing home care, and preventive services.  In order to qualify for enrollment in an MLTCP, Medicaid beneficiaries need to, among other things, be eligible for a nursing home level of care and require at least 120 days of community-based long-term care, which includes a wide range of health care services such as personal care services.  CenterLight contracted with SADCCs to provide care, including personal care services, to CenterLight MLTCP members.

In the settlement agreement, CenterLight admits that 1,241 CenterLight MLTC members who had been referred by SADCCs or had used SADCC services were not eligible to be members of the managed care plan.  Many of these ineligible members were not eligible at the time of their initial enrollment, while others were ineligible to remain in the managed care plan at the time of their re-assessment but were not dis-enrolled in a timely manner.  Although the SADCCs were supposed to be providing care to CenterLight members, CenterLight admits that various SADCCs in its provider network did not provide services that qualified as personal care services under the terms of its Medicaid contract or were not legally permitted to provide such services.

If you know of or suspect Medicaid fraud, contact us now.

California Hospital to Pay More Than $3.2 Million to Settle Allegations That It Violated the Physician Self-Referral Law

The Department of Justice announced on Friday that Tri-City Medical Center, a hospital located in Oceanside, California, has agreed to pay $3,278,464 to resolve allegations that it violated the Stark Law and the False Claims Act by maintaining financial arrangements with community-based physicians and physician groups that violated the Medicare program’s prohibition on financial relationships between hospitals and referring physicians.

The Stark Law generally forbids a hospital from billing Medicare for certain services referred by physicians who have a financial relationship with the hospital unless that relationship falls within an enumerated exception.  The exceptions generally require, among other things, that the financial arrangements do not exceed fair market value, do not take into account the volume or value of any referrals and are commercially reasonable.  In addition, arrangements with physicians who are not hospital employees must be set out in writing and satisfy a number of other requirements.

“The settlement of this matter reflects not only our commitment to protect the integrity of the healthcare system through enforcement of the Stark Law, but also our willingness to work with providers who disclose their own misconduct,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.

The settlement announced today resolves allegations that Tri-City Medical Center maintained 97 financial arrangements with physicians and physician groups that did not comply with the Stark Law.  The hospital identified five arrangements with its former chief of staff from 2008 until 2011 that, in the aggregate, appeared not to be commercially reasonable or for fair market value.  The hospital also identified 92 financial arrangements with community-based physicians and practice groups that did not satisfy an exception to the Stark Law from 2009 until 2010 because, among other things, the written agreements were expired, missing signatures or could not be located.

“Patient referrals should be based on a physician’s medical judgment and a patient’s medical needs, not on a physician’s financial interests or a hospital’s business goals,” said U. S. Attorney Laura E. Duffy of the Southern District of California.  “This settlement reinforces that hospitals will face consequences when they enter into financial arrangements with physicians that do not comply with the law. We will continue to hold health care providers accountable when they shirk their legal responsibilities to the detriment of tax payer-funded health care programs.”

“Together with our law enforcement partners, our agency’s investigators and attorneys will continue to work with health care providers who use the self-disclosure protocol to resolve their billing misconduct,” said Special Agent in Charge Chris Schrank of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Los Angeles region.”

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $27.1 billion through False Claims Act cases, with more than $17.1 billion of that amount recovered in cases involving fraud against federal health care programs.

This matter was handled by the U.S. Attorney’s Office of the Southern District of California, the Civil Division’s Commercial Litigation Branch and HHS-OIG.  The claims settled by this agreement are allegations only, and there has been no determination of liability.

If you know of or suspect Stark law violations, contact us now.

Largest Nursing Home Therapy Provider in the Nation, Kindred/Rehabcare, to Pay $125 Million to Resolve False Claims Act Allegations

The Department of Justice announced yesterday that contract therapy providers RehabCare Group Inc., RehabCare Group East Inc. and their parent, Kindred Healthcare Inc., have agreed to pay $125 million to resolve a government lawsuit alleging that they violated the False Claims Act by knowingly causing skilled nursing facilities (SNFs) to submit false claims to Medicare for rehabilitation therapy services that were not reasonable, necessary and skilled, or that never occurred, the Department of Justice announced today.

RehabCare Group Inc. and RehabCare Group East Inc. were purchased by the Louisville, Kentucky-based Kindred Healthcare Inc. in 2011 and they now operate under the name RehabCare as a division of Kindred.  RehabCare is the largest provider of therapy in the nation, contracting with more than 1,000 SNFs in 44 states to provide rehabilitation therapy to their patients.

“Medicare beneficiaries are entitled to receive care that is dictated by their clinical needs rather than the fiscal interests of healthcare providers,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “All providers, whether contractors or direct billers of taxpayer-funded federal healthcare programs, will be held accountable when their actions cause false claims for unnecessary services.”

The government’s complaint alleged that RehabCare’s policies and practices, including setting unrealistic financial goals and scheduling therapy to achieve the highest reimbursement level regardless of the clinical needs of its patients, resulted in Rehabcare providing unreasonable and unnecessary services to Medicare patients and led its SNF customers to submit artificially and improperly inflated bills to Medicare that included those services.  Specifically, the government’s complaint alleged that RehabCare’s schemes included the following:

  • Presumptively placing patients in the highest therapy reimbursement level, rather than relying on individualized evaluations to determine the level of care most suitable for each patient’s clinical needs;
  • During the period prior to Oct. 1, 2011, boosting the amount of reported therapy during “assessment reference periods,” thereby causing and enabling SNFs to bill for the care of their Medicare patients at the highest therapy reimbursement level, while providing materially less therapy to those same patients outside the assessment reference periods, when the SNFs were not required to report to Medicare the amount of therapy RehabCare was providing to their patients (a practice known as “ramping”);
  • Scheduling and reporting the provision of therapy to patients even after the patients’ treating therapists had recommended that they be discharged from therapy;
  • Arbitrarily shifting the number of minutes of planned therapy among different therapy disciplines (i.e., physical, occupational and speech therapy) to ensure targeted therapy reimbursement levels were achieved, regardless of the clinical need for the therapy;
  • Especially after Oct. 1, 2011 and continuing through Sept. 30, 2013, providing significantly higher amounts of therapy at the very end of a therapy measurement period not due to medical necessity but rather to reach the minimum time threshold for the highest therapy reimbursement level, to enable SNFs to bill for the care of their Medicare patients accordingly, even though the patients were receiving materially less therapy on preceding days;
  • Inflating initial reimbursement levels by reporting time spent on initial evaluations as therapy time rather than evaluation time;
  • Reporting that skilled therapy had been provided to patients when in fact the patients were asleep or otherwise unable to undergo or benefit from skilled therapy (e.g., when a patient had been transitioned to palliative end-of-life care); and
  • Reporting estimated or rounded minutes instead of reporting the actual minutes of therapy provided.

“This False Claim Act settlement addresses allegations that RehabCare and its nursing facility customers engaged in a systematic and broad-ranging scheme to increase profits by delivering, or purporting to deliver, therapy in a manner that was focused on increasing Medicare reimbursement rather than on the clinical needs of patients,” said U.S. Attorney Carmen M. Ortiz for the District of Massachusetts.  “The complaint outlines the extent and sophistication of this fraud, and the government’s continuing work to ensure that the provision of care in skilled nursing facilities is based on patients’ clinical needs.”

“Health providers seeking to increase Medicare profits, rather than providing suitable, high-quality care, will be investigated and prosecuted,” said Inspector General Daniel R. Levinson for the U.S. Department of Health and Human Services (HHS).  “Under our robust compliance agreement, an outside review organization will scrutinize a random sample of medical records annually to assess the medical necessity and reasonableness of therapy services provided by RehabCare.”

In addition to RehabCare, the Department of Justice also announced settlements today with four SNFs for their role in submitting claims to Medicare that were false because they were based in part on therapy provided by RehabCare that was not reasonable, necessary and skilled, or that did not occur.  These settlements include:  A $3.9 million settlement with Wingate Healthcare Inc. and 16 of its facilities in Massachusetts and New York; A $2.2 million settlement with THI of Pennsylvania at Broomall LLC and THI of Texas at Fort Worth LLC; A $1.375 million settlement with Essex Group Management and two of its Massachusetts facilities, Brandon Woods of Dartmouth and Blaire House of Milford and a $750,000 settlement with Frederick County, Maryland, which formerly operated the Citizens Care skilled nursing facility.  The department had previously reached settlements with a number of other SNFs for similar conduct.  Seehttp://www.justice.gov/opa/pr/two-companies-pay-375-million-allegedly-causing-submission-claims-unreasonable-or-unnecessary; http://www.justice.gov/opa/pr/episcopal-ministries-aging-inc-pay-13-million-allegedly-causing-submission-claims; http://www.justice.gov/usao-ma/pr/new-york-catholic-nursing-chain-pay-35-million-resolve-allegations-concerning-claims; http://www.justice.gov/usao-ma/pr/maine-nursing-home-pay-12-million-resolve-allegations-concerning-rehabilitation-therapy.

The settlement with RehabCare resolves allegations originally brought in a lawsuit filed under the qui tam, or whistleblower,provisions of the False Claims Act by Janet Halpin, a physical therapist and former rehabilitation manager for RehabCare and Shawn Fahey, an occupational therapist who worked for RehabCare.  The act permits private parties to sue on behalf of the government for false claims for government funds and to receive a share of any recovery.  The government may intervene and file its own complaint in such a lawsuit, as it has done in this case.  The whistleblowers will receive nearly $24 million as their share of the recovery from RehabCare.

The settlements announced today illustrate the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $27.1 billion through False Claims Act cases, with more than $17.1 billion of that amount recovered in cases involving fraud against federal health care programs.  Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, including the conduct described in the United States’ complaint, can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).

This matter was handled by the Civil Division’s Commercial Litigation Branch; the U.S. Attorney’s Office for the District of Massachusetts; HHS Office of Inspector General and the FBI.

The case is captioned United States ex rel. Halpin and Fahey v. Kindred Healthcare, Inc., et al., Case No. 1:11cv12139-RGS (D. Mass.).

The claims settled are allegations only, and there has been no determination of liability.

If you are aware of or suspect Medicare fraud, contact us now.

Nashville Pharmacy Services Settles False Claims Act Lawsuit

Yesterday the Department of Justice announced that Nashville Pharmacy Services, LLC, and its majority owner, Kevin Hartman, have agreed to pay up to $7.8 million to settle allegations that they overbilled Medicare and TennCare for pharmacy services, announced David Rivera, U.S. Attorney for the Middle District of Tennessee.  Nashville Pharmacy Services’ primary location is at 100 Oaks in Nashville, Tenn. and it specializes in dispensing HIV and AIDS-related medications.

“Pursuing individuals and corporations who engage in healthcare fraud remains a top priority of the U.S. Attorney’s Office,” said U.S. Attorney David Rivera.  “We remain committed to working with our state and federal partners to hold those accountable who attempt to profit at the expense of taxpayers and compromise the integrity of our healthcare programs.”

The settlement resolves the government’s allegations that Nashville Pharmacy Services submitted false claims to TennCare and Medicare primarily during the period from February 2011 through May 2012.  The government’s lawsuit alleged that Nashville Pharmacy Services engaged in the following conduct:

  • automatically refilled medications without a request from the beneficiary, their physician, or a person acting as the beneficiary’s agent, in violation of TennCare’s contractual requirements;
  • routinely and improperly waived TennCare and Medicare co-payments without an individualized assessment of those beneficiaries’ inability to pay;
  • improperly used pharmaceutical manufacturers’ co-payment cards to pay the co-payments of certain Medicare recipients for thirteen Medicare beneficiaries;
  • billed Medicare and TennCare for certain medications that were dispensed after the dates of death of 15 beneficiaries with either Medicare or TennCare coverage; and
  • billed Medicare or TennCare for medications that lacked a valid prescription from a licensed provider for 22 beneficiaries with either Medicare or TennCare coverage.

“This is a great example of the U.S. Attorney’s Office and our office working together to address fraud in our government healthcare programs,” said Tennessee Attorney General Herbert H. Slatery III.  “Pursuing those who knowingly take advantage of the system serves as a deterrent and helps protect funding for our most vulnerable citizens.”

Under the settlement agreement, Nashville Pharmacy Services has already paid $500,000 to the government and will make additional contingency payments to the government for the next five years.  The total payments will depend on Nashville Pharmacy Services’ revenue for each year during that period and could ultimately amount to $7.8 million.  Of that amount, the United States will receive roughly 49 percent of the recovery, and the State of Tennessee will receive roughly 33 percent of the recovery.

The allegations resolved by today’s settlement were originally raised in a lawsuit filed against Nashville Pharmacy Services by Marsha McCullough, a former order entry technician who worked for Nashville Pharmacy Services from May 2011 through July 2012.  She brought her claims under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens with knowledge of false claims to bring civil suits on behalf of the government and to share in any recovery.  McCullough could receive up to $1.4 million as her share of the settlement.

The case was handled by the United States’ Attorney’s Office for the Middle District of Tennessee and the Tennessee Attorney General’s Office and investigated by U.S. Department of Health & Human Services Office of Inspector General and the Tennessee Bureau of Investigation Medicaid Fraud Control Unit.  Assistant U.S. Attorney Ellen Bowden McIntyre represented the United States.  Assistant Attorney General Mary McCullohs represented Tennessee.

The case is docketed as United States ex rel. McCullough v. Nashville Pharmacy Services, LLC, No. 3:12-cv-0823 (M.D. Tenn.).  The claims settled by this agreement are allegations only, and there has been no determination of liability.

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