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Celgene Agrees to Pay $280 Million to Resolve Fraud Allegations Related to Promotion of Cancer Drugs Not Approved by FDA

Celgene Corp., a manufacturer of pharmaceuticals headquartered in Summit, New Jersey, has agreed to pay $280 million to settle fraud allegations related to the promotion of two cancer treatment drugs for uses not approved by the Food and Drug Administration, the Justice Department announced yesterday.

Celgene agreed to pay the settlement to resolve a “whistleblower” lawsuit that alleged it had violated the federal False Claims Act by submitting false claims to Medicare. The lawsuit also alleged that Celgene violated the laws of 28 states and the District of Columbia by submitting fraudulent claims to state health care programs, including California’s Medi-Cal program.

Pursuant to the settlement, which was finalized last week, Celgene will pay $259.3 million to the United States and $20.7 million to the 28 states and the District of Columbia. California will receive $4.7 million, more than any other state. Celgene is expected to pay the settlement tomorrow.

The settlement resolves allegations brought in a “whistleblower” lawsuit that Celgene promoted two cancer drugs – Thalomid and Revlimid – for uses that were not approved by the FDA and not covered by federal health care programs. The allegations included the use of false and misleading statements about the drugs, and paying kickbacks to physicians to induce them to prescribe the drugs.

“Patients deserve to know their doctors are prescribing drugs that are likely to provide effective treatment, rather than drugs marketed aggressively by pharmaceutical companies,” said Acting United States Attorney Sandra R. Brown.

The whistleblower lawsuit was filed in United States District Court by Beverly Brown, who was employed as a sales manager by Celgene, under the qui tam provisions of the False Claims Act and similar laws of the District of Columbia and the 28 states included in the lawsuit. Under the False Claims Act, private citizens can bring suit on behalf of the United States and share in any recovery. The United States may intervene in the lawsuit, or, as in this case, the whistleblower may pursue the action.

“This recovery again spotlights the importance of the False Claims Act in preserving precious government health plan resources,” said Christian J. Schrank, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services (HHS-OIG). “This invaluable law enlists all in the battle against fraudulent health care schemes.”

The case, United States ex rel. Brown v. Celgene Corp., CV10-3165, was monitored by the United States Attorney’s Office, the Civil Division’s Commercial Litigation Branch, and HHS-OIG.

The claims settled by this agreement are allegations only, and the defendant did not admit liability in settling the action.

SEC Announces $2.5 Million Whistleblower Award

The Securities and Exchange Commission announced yesterday an award of nearly $2.5 million to an employee of a domestic government agency whose whistleblower tip helped launch an SEC investigation and whose continued assistance enabled the SEC to address a company’s misconduct.

”Whistleblowers can provide a wealth of information and ongoing assistance that helps our agency bring enforcement actions quicker and more efficiently,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower.  ”This whistleblower not only helped us open the case, but also provided timely ongoing assistance along with critical documents and testimony that accelerated the pace of our enforcement action.”

Approximately $156 million has now been awarded to 45 whistleblowers who voluntarily provided the SEC with original and useful information that led to a successful enforcement action.  No money has been taken or withheld from harmed investors to pay whistleblower awards.

By law, the SEC protects the confidentiality of whistleblowers and does not disclose information that might directly or indirectly reveal a whistleblower’s identity.  Whistleblowers may be eligible for an award when they voluntarily provide the SEC with original, timely, and credible information that leads to a successful enforcement action.  Whistleblower awards can range from 10 percent to 30 percent of the money collected when the monetary sanctions exceed $1 million.  All payments are made out of an investor protection fund established by Congress that is financed entirely through monetary sanctions paid to the SEC by securities law violators.

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

Owner Of Tampa Parathyroid Practice Agrees To Pay $4 Million To Resolve False Claims Act Allegations

Dr. James Norman, the owner and operator of James Norman, MD, PA, a/k/a James Norman, MD, PA Parathyroid Center, d/b/a Norman Parathyroid Center (collectively, Norman) has agreed to pay $4 million to resolve allegations that he violated the False Claims Act by knowingly engaging in various unlawful billing practices with respect to Medicare and other federal health care programs and their beneficiaries.

Specifically, the government alleges that, from April 2008 through December 2016, Dr. Norman submitted fraudulent claims to Medicare, TRICARE, and the Federal Employee Health Benefits Program for pre-operative examinations performed on the day before or the day of surgery, and charged and collected extra fees from federal health care beneficiaries for services for which he had already received payment from the government. These extra fees ranged from $150 to $750 for Florida residents, to $1,750 or more for patients who lived out-of-state. Collectively, Dr. Norman and his practice pocketed hundreds of thousands of dollars as a result of these illicit billing practices.

“Fraudulent billing of the government, while also charging Medicare and other federal health care beneficiaries extra fees for services that the government has already paid for victimizes taxpayers, military veterans, the elderly, and other members of our community, and will not be tolerated,” said Acting U.S. Attorney Muldrow. “This lawsuit and today’s settlement demonstrates our office’s ongoing efforts to safeguard federal health care program beneficiaries from the effects of such illegal conduct.”

In addition to paying $4 million, Norman has also agreed to enter into an integrity agreement with the Inspector General of the U.S. Department of Health and Human Services.

“Physicians who systematically overbill Federal health care programs and their vulnerable patients will be held responsible for this fraudulent behavior,” said Special Agent in Charge Shimon R. Richmond of HHS-OIG. “Those who engage in such schemes can expect a thorough investigation and strong remedial measures such as those in the Integrity Agreement we signed with Dr. Norman.”

The settlement concludes a lawsuit originally filed by a former patient of Dr. Norman, Myra Gross, and her husband, Dr. David Gross, in the United States District Court for the Middle District of Florida. The lawsuit was filed 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. Act also allows the government to intervene and take over the action, as it did in this case. Ms. Gross and her husband, Dr. Gross, will receive roughly $600,000 of the proceeds from the settlement with Norman.

The government’s action in this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).

The settlement was the result of a coordinated effort by the U.S. Attorney’s Office for the Middle District of Florida and the U.S. Department of Health and Human Services – Office of Inspector General. It was handled Assistant U.S. Attorney Christopher Tuite.

The case is captioned United States ex rel. Gross, et al. v. James Norman, MD, PA, et al., Case No. 8:14-cv-978-T-33EAJ. The settlement resolves the United States’ claims in that case. The claims resolved by the settlement are allegations only, and there has been no determination of liability.

Hospice to pay $2.4 Million to resolve False Claims Act Allegations

Compassionate Care Hospice Group, Inc., (“CCH Group”) has agreed to pay $2.4 million to resolve allegations that CCH Group and its subsidiary Compassionate Care Hospice of Atlanta, LLC, (“CCH Atlanta”) submitted or caused the submission of false claims to Medicare and Medicaid by engaging in improper financial relationships with contracted physicians. CCH Group is a Florida corporation with its principal place of business in Parsippany, New Jersey, and subsidiaries and affiliates in numerous states.

“Kickbacks should never play a role in medical decision-making,” said U.S. Attorney John Horn. “When healthcare providers are paid for referrals, the costs of health services inevitably rise and ultimately are borne by taxpayers.”

“The False Claims Act settlement in this case should be a deterrent to those who would so selfishly circumvent our federal healthcare programs to their benefit,” said FBI Special Agent in Charge David J. LeValley. “Rest assured the FBI is committed to diligently investigating those who would defraud our federally funded healthcare programs, depriving those who truly depend on them.”

“It is paramount to our health care system that those seeking health care advice know that providers and treatments recommended to them are not influenced by illegal remuneration or arrangements,” said Special Agent in Charge Derrick L. Jackson, of the U.S. Department of Health and Human Services, Office of Inspector General. “The OIG is committed to working with our law enforcement partners to combat this sort of activity.”

“Our office’s Medicaid Fraud Control Unit will continue to work with our federal partners to go after any action that compromises the integrity of our health care systems,” said Georgia Attorney General Chris Carr. “This type of scheme obscures the proper relationship among those providing health care services to Medicaid members, and it diminishes the quality of health care options available to our citizens. We won’t stand for it.”

The government alleges that, between April 3, 2007 and April 29, 2011, CCH Group and CCH Atlanta paid illegal remuneration to five physicians in order to induce the providers to refer patients to CCH Atlanta for hospice services and certify individuals as eligible for hospice services. The government also alleges that CCH Atlanta and CCH Group submitted or caused the submission of claims to Medicare and Medicaid for services provided to the individuals who had been referred by the physicians because of the kickbacks. The illegal remuneration took the form of (1) payments to a medical director in exchange for referrals and (2) sham contracts with associate medical directors in exchange for referrals.

The settlement resolves allegations filed by Cathy Morris and Josie King, former CCH Atlanta employees, under the qui tam, or whistleblower, provisions of the False Claims Act, which authorizes private parties to sue for false claims on behalf of the United States and share in the recovery. The lawsuit was filed in the Northern District of Georgia and is captioned United States & State of Georgia ex rel. Morris & King v. Compassionate Care Hospice Group of Atlanta, LLC, et al., No. 1:10-cv-3450 (N.D. Ga.). Ms. Morris and Ms. King will receive a share of the settlement.

The claims resolved by the settlement are allegations only, and there has been no determination of liability.

This case was investigated by the U.S. Attorney’s Office for the Northern District of Georgia, the U.S. Department of Health & Human Services Office of Inspector General, the Federal Bureau of Investigation, and the Georgia State Attorney General’s Medicaid Fraud Control Unit.

The civil settlement was reached by Assistant U.S. Attorneys Lena Amanti and Neeli Ben-David and Georgia State Assistant Attorney General Sara Vann.

Allergan Pays $13 Million to Settle Whistleblower Lawsuit Alleging Kickbacks to Eye Care Providers

Allergan, Inc., has agreed to pay $13 million to the United States and 19 States to resolve a whistleblower lawsuit alleging it engaged in a kickback scheme in violation of multiple federal and state laws. The suit, filed and litigated by the Philadelphia law firm Pietragallo Gordon Alfano Bosick & Raspanti and Chicago law firm Goldberg Kohn, on behalf of two prominent Philadelphia-area ophthalmologists, claimed that Allergan provided business consulting and other valuable services to eye care providers to induce them to write prescriptions for Allergan eye care products.  These products were paid for by the Medicare and Medicaid health insurance programs.

The complaint was filed in 2009 under the qui tam, or whistleblower provisions of the False Claims Act and similar State False Claims laws. The False Claims Act encourages private citizens to report fraud against the government by allowing them to sue on behalf of the government and receive a share of any recovery.  After the Government elected in 2010 not to intervene in the lawsuit, the whistleblowers and their legal team continued to pursue the kickback allegations against Allergan, and ultimately secured the $13 million recovery on behalf of federal and state taxpayers.

The unsealed complaint alleged that Allergan knowingly provided valuable business consulting services, continuing medical education, and other valuable services to eye care providers throughout the United States who enrolled in Allergan’s proprietary “Allergan Access” program. The primary purpose for providing these valuable services was to induce doctors to write prescriptions for Allergan’s eye care products, many of which had less expensive treatment alternatives.

“We are very proud to represent two prominent and highly credentialed ophthalmologists, who had the integrity and courage to come forward.  Their efforts have saved American taxpayers many millions of dollars by putting a stop to Allergan’s scheme” said Marc S. Raspanti, a principal at Pietragallo Gordon Alfano Bosick & Raspanti.

“Patients deserve to know that their medical professional is making decisions based on their best interests and not because a drug company is offering incentives to steer patients to specific drugs” said David Chizewer, a principal at Goldberg Kohn.

The legal team for the two whistleblowers was led by Michael A. Morse and Pamela Coyle Brecht from the Pietragallo firm, and Matthew Organ from the Goldberg Kohn firm.

The government’s legal team who oversaw the non-intervened settlement was led by Assistant United States Attorneys Charlene Keller Fullmer, and United States Department of Justice Trial Attorney Jennifer Cihon.  Jay Speers, Counsel to New York Attorney General, and Robert Patten, a former Assistant Attorney General for the State of Massachusetts, both played an integral role in investigating the whistleblowers’ kickback allegations against Allergan.

The lawsuit is United States of America ex rel. Herbert J. Nevyas, M.D. and Anita Nevyas-Wallace, M.D. v. Allergan, Inc., Civil Action No. 09-CV-00432 (E.D. Pa.) (United States District Court Judge Mark A. Kearney).

U.S. Reaches $8.3 Million Civil Settlement with Reliant Care Group and Reliant Affiliated Entities

The United States Attorney’s Office for the Eastern District of Missouri announced yesterday that the United States, Reliant Care Group, Reliant Care Management Company, Reliant Care Rehabilitative Services, and a number of Reliant affiliated skilled nursing facilities (Reliant) reached a civil settlement that will resolve the United States’ claims against Reliant under the False Claims Act for knowingly submitting false claims to Medicare for providing unnecessary physical, speech, and occupational therapy to nursing home residents.

According to the United States’ allegations, from January of 2008 through April of 2014, Reliant provided unnecessary physical, speech and occupational therapy to nursing home residents who had a relatively high level of independence and who were residing in a skilled nursing facility primarily because of a psychiatric condition. The United States alleged that Reliant provided the unnecessary therapy and then sought the inflated reimbursement from Medicare influenced by its own financial considerations. The United States further alleged that some Reliant Care Rehabilitative Services management pressured therapists to provide therapy to residents even when the therapists believed that the therapy was not medically necessary.

As part of the settlement, Reliant will repay the United States $8,368,878.

Reliant has also entered into a five-year Corporate Integrity Agreement with the United States Department of Health and Human Services, Office of Inspector General (HHS-OIG). Pursuant to the terms of the Corporate Integrity Agreement, Reliant must comply with a number of reporting obligations to ensure that Reliant remains compliant with Federal health care program requirements.

The settlement sends a message to those who seek to take advantage of the Medicare program. “Health care fraud is a major and increasingly serious problem that costs taxpayers millions in lost and wasted dollars while depriving vulnerable beneficiaries of the care and support they need,” said Special Agent in Charge Steven Hanson from HHS-OIG. “Every dollar that we save or recover allows us to better serve those who really need and deserve our help. We will continue to aggressively investigate these cases in an effort to eliminate the corruption in our health care system.”

This civil settlement is part of ongoing efforts by the Department of Justice and the United States Department of Health and Human Services to recover funds diverted from the Medicare Trust Account and is the result of the combined work of the U.S. Attorney’s Office for the Eastern District of Missouri, HHS-OIG, and the Federal Bureau of Investigation.

Los Angeles Hospital Agrees to Pay $42 Million to Settle Alleged False Claims Act Violations Arising from Improper Payments to Physicians

PAMC Ltd., and Pacific Alliance Medical Center Inc., which together own and operate Pacific Alliance Medical Center, an acute care hospital located in Los Angeles, California, have agreed to pay $42 million to settle allegations that they violated the False Claims Act by engaging in improper financial relationships with referring physicians, the Justice Department announced yesterday. Of the total settlement amount, $31.9 million will be paid to the Federal Government, and $10 million will be paid to the State of California.

The settlement announced yesterday resolves allegations brought in a whistleblower lawsuit that the defendants submitted false claims to the Medicare and MediCal Programs for services rendered to patients referred by physicians with whom the defendants had improper financial relationships. These relationships took the form of (1) arrangements under which the defendants allegedly paid above-market rates to rent office space in physicians’ offices, and (2) marketing arrangements that allegedly provided undue benefit to physicians’ practices. The lawsuit alleged that these relationships violated the Anti-Kickback Statute and the Stark Law, both of which restrict the financial relationships that hospitals may have with doctors who refer patients to them.

“This is another example of how the False Claims Act whistleblower provisions can help protect the public fisc,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “This recovery should help to deter other health care providers from entering into improper financial relationships with physicians that can taint the physicians’ medical judgment, to the detriment of patients and taxpayers.”

The lawsuit was filed by Paul Chan, who was employed as a manager by one of the defendants, under the qui tam provisions of the False Claims Act. Under the Act, private citizens can bring suit on behalf of the United States and share in any recovery. The United States may intervene in the lawsuit, or, as in this case, the whistleblower may pursue the action. Mr. Chan will receive over $9.2 million as his share of the federal recovery.

“Federal law prohibits improper financial relationships between hospitals that receive federal health care funds and medical professionals – this is to protect the doctor-patient relationship and to ensure the quality of care provided,” said Acting U.S. Attorney Sandra R. Brown for the Central District of California. “Patients deserve to know their doctors are making health care decisions based solely on medical need and not for any potential financial benefit.”

“This settlement is a warning to health care companies that think they can boost their profits by entering into improper financial arrangements with referring physicians,” said Special Agent in Charge Christian J. Schrank of the Department of Health and Human Services, Office of Inspector General (HHS-OIG). “Working with our law enforcement partners, we will continue to crack down on such deals, which work to undermine impartial medical judgement, drive up health care costs, and corrode the public’s trust in the health care system.”

The case, United States ex rel. Chan v. PAMC, Ltd., et al., Case No. 13-cv-4273 (C.D. Cal.), was monitored by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Central District of California, and HHS-OIG. The claims settled by this agreement are allegations only, and there has been no determination of liability.

Cardiac Monitoring Companies and Executive Agree to Pay $13.45 Million to Resolve False Claims Act Allegations

AMI Monitoring Inc. aka Spectocor, its owner, Joseph Bogdan, Medi-Lynx Cardiac Monitoring LLC, and Medicalgorithmics SA, the current majority owner of Medi-Lynx Cardiac Monitoring LLC, have agreed to resolve allegations that they violated the False Claims Act by billing Medicare for higher and more expensive levels of cardiac monitoring services than requested by the ordering physicians, the Department of Justice announced yesterday. Spectocor and Bogdan have agreed to pay $10.56 million, and Medi-Lynx and Medicalgorithmics have agreed to pay $2.89 million.

“Independent diagnostic testing facilities that improperly steer physicians to order higher levels of service will be held accountable,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “We will vigilantly ensure the appropriate use of our country’s limited Medicare funds.”

From 2011 through 2016, Spectocor, headquartered in McKinney, Texas, and Joseph Bogdan, allegedly marketed the Pocket ECG as capable of performing three separate types of cardiac monitoring services—holter, event, and telemetry. When a physician sought to enroll a patient for Pocket ECG, however, the enrollment process allegedly only allowed the physician to enroll in Pocket ECG for the service which provided the highest rate of reimbursement provided by a patient’s insurance, thus steering the ordering physician to a more costly level of service. In 2013, Medi-Lynx, a related company headquartered in Plano, Texas, began selling the Pocket ECG and allegedly adopted this same enrollment procedure. Medicalgorithmics SA, a limited liability company based in Warsaw, Poland, acquired a controlling interest in Medi-Lynx in September 2016.

“Sophisticated medical technology can be used to help doctors dramatically improve the lives of their patients, but it can also be misused to fraudulently increase medical bills,” said Acting U.S. Attorney William E. Fitzpatrick for the District of New Jersey. “Today’s settlement demonstrates that the federal government is committed to preserving the integrity of the Medicare system and ensuring that Medicare funds are spent only for patient care.”

“Billing for unneeded services, as the government alleged, takes unfair advantage of Medicare patients and steals from taxpayers,” said Special Agent in Charge Scott J. Lampert for the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “OIG, along with our law enforcement partners, will aggressively investigate these crimes.”

The settlements resolve allegations filed in a lawsuit by Eben Steele, a former sales manager at Spectocor. The lawsuit was filed in a federal court in Newark, New Jersey, 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 this case. Mr. Steele will receive approximately $2.4 million from the two settlements.

The government’s resolution of this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services at 900-HHS-TIPS (800-447-8477).

The settlements were the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the District of New Jersey and the HHS-OIG.

The case is captioned United States ex rel. John Doe v. Spectocor Enterprise Services, LLC, et al., Case No. 14-1387 (KSH) (D. N.J.). The claims resolved by the settlements are allegations only and there has been no determination of liability.

Dr. James M. Crumb, and Mobile Based Physician Group, Coastal Neurological Institute, P.C., paid $1.4 million to Settle False Claims Act Allegations

Acting United States Attorney Steve Butler, of the Southern District of Alabama, announced last week that Dr. James M. Crumb, a Physical Medicine and Rehabilitative specialist currently practicing in Mobile, Alabama as Mobility Metabolism and Wellness, P.C. (MMW), and Coastal Neurological Institute, P.C. (CNI), a local neurosurgeon physician group, collectively paid $1.4 million to resolve allegations that they violated the False Claims Act (“FCA”) by engaging in fraudulent schemes to maximize payment from the Medicare, Medicaid, and TRICARE health care programs.

“Our office will protect federal health care programs by pursuing providers who bill for medically unreasonable and unnecessary services and engage in fraudulent billing practices to seek payments to which they are not entitled,” said Acting United States Attorney Butler.  “We must prevent fraud, waste, and abuse of the Medicare, Medicaid, and Tricare programs as taxpayer dollars are at stake.”

In late December 2015, the United States Attorney’s Office filed a civil lawsuit against Defendants CNI, Crumb, and MMW, on behalf of the Department of Health and Human Services and the Department of Defense.  The United States alleged that the Defendants knowingly billed federal health care programs for medically unreasonable and unnecessary ultrasound guidance used with routine lab blood draws, and with Botox and trigger point injections.  The United States further alleged that CNI, Crumb, and other CNI physician employees unnamed in the lawsuit, knowingly manipulated billing codes in order to circumvent safeguards implemented by Medicare’s National Correct Coding Initiative to combat improper and fraudulent duplicate claim line billing of certain procedure codes, including ultrasound guidance used with needle placement.  As a result of this billing scheme, the Defendants sometimes billed 15 to 30 identical ultrasound guidance claims for a single patient office visit.

The United States’ Second Amended Complaint separately alleged that Crumb knowingly falsified patient diagnoses in order to ensure payment by the federal health care programs.  Because those programs do not cover Botox for pain management, Crumb allegedly used diagnoses of uncommon or rare neurological movement disorders for the sole purpose of obtaining reimbursement for the administered Botox injections.  The United States further alleged that Crumb ordered inflated dosages of Botox medications paid by the Alabama Medicaid Agency that were not medically necessary and were not used on the patients for whom the medication was prescribed.

The investigation and litigation were conducted by the Office of Inspector General, Department of Health and Human Services (OIG-HHS), and the U.S. Attorney’s Office.  Assistant United States Attorneys Deidre Colson and Daryl Atchison handled the case on behalf of the United States.  As part of the settlement, Crumb entered into a Corporate Integrity Agreement with OIG-HHS, which obligates Crumb to undertake substantial internal compliance reforms and to submit his federal health care program claims to independent review for the next three years.

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

Genesis HealthCare To Pay $53.6M To Settle FCA Allegations

The Justice Department announced last week that Genesis Healthcare Inc. (Genesis) will pay the federal government $53,639,288.04, including interest, to settle six federal lawsuits and investigations alleging that companies and facilities acquired by Genesis violated the False Claims Act by causing the submission of false claims to government health care programs for medically unnecessary therapy and hospice services, and grossly substandard nursing care. Genesis, headquartered in Kennett Square, Pennsylvania, owns and operates through its subsidiaries skilled nursing facilities, assisted/senior living facilities, and a rehabilitation therapy business.

“We will continue to hold health care providers accountable if they bill for unnecessary or substandard services or treatment,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Today’s settlement demonstrates our unwavering commitment to protect federal health care programs against unscrupulous providers.”

This settlement resolves four sets of allegations. First, the settlement resolves allegations that from April 1, 2010 through March 31, 2013, Skilled Healthcare Group Inc. (SKG) and its subsidiaries, Skilled Healthcare LLC (Skilled LLC) and Creekside Hospice II LLC, knowingly submitted or caused to be submitted false claims to Medicare for services performed at the Creekside Hospice facility in Las Vegas, Nevada by: (1) billing for hospice services for patients who were not terminally ill and so were not eligible for the Medicare hospice benefit and (2) billing inappropriately for certain physician evaluation management services.

Second, this settlement resolves allegations that from Jan. 1, 2005 through Dec. 31, 2013, SKG and its subsidiaries, Skilled LLC and Hallmark Rehabilitation GP LLC, knowingly submitted or caused to be submitted false claims to Medicare, TRICARE, and Medicaid at certain facilities by providing therapy to certain patients longer than medically necessary, and/or billing for more therapy minutes than the patients actually received. The settlement also resolves allegations that those companies fraudulently assigned patients a higher Resource Utilization Group (RUG) level than necessary. Medicare reimburses skilled nursing facilities based on a patient’s RUG level, which is supposed to be determined by the amount of skilled therapy required by the patient.

Third, this settlement resolves allegations that from Jan. 1, 2008, through Sept. 27, 2013, Sun Healthcare Group Inc., SunDance Rehabilitation Agency Inc., and SunDance Rehabilitation Corp. knowingly submitted or caused the submission of false claims to Medicare Part B by billing for outpatient therapy services provided in the State of Georgia that were (1) not medically necessary or (2) unskilled in nature.

Finally, this settlement resolves allegations that between Sept. 1, 2003 and Jan. 3, 2010, Skilled LLC submitted false claims to the Medicare and Medi-Cal programs at certain of its nursing homes for services that were grossly substandard and/or worthless and therefore ineligible for payment. More specifically, the settlement resolves allegations that Skilled LLC violated certain essential requirements that nursing homes are required to meet to participate in and receive reimbursements from government healthcare programs and failed to provide sufficient nurse staffing to meet residents’ needs.

SG and its subsidiaries were acquired by Genesis after the conduct at issue in this settlement. Sun Healthcare Group Inc., SunDance Rehabilitation Agency Inc. and SunDance Rehabilitation Corp. were acquired by Genesis in December 2012.

“Safeguarding federal health care programs and patients is a priority,” said Acting U.S. Attorney Steven W. Myhre for the District of Nevada. “Today’s settlement is an example of the U.S. Attorney’s Office’s commitment to holding medical providers accountable for fraudulent billing of medically unnecessary treatments and services. We are committed to protecting federal health care programs, including Medicare, TRICARE, and Medicaid, which are funded by taxpayer dollars.”

“We are committed to protecting the federal health care programs and the patients who are enrolled in them,” said U.S. Attorney Brian J. Stretch for the Northern District of California. “We will continue to vigorously pursue companies and individuals who provide care that is grossly deficient or unnecessary.”

“Health care providers that falsify claims for unauthorized or unnecessary services steal precious taxpayer dollars, and we will aggressively seek to recover those funds for the program that needs them,” said U. S. Attorney John Horn for the Northern District of Georgia.

“It’s disturbing when health care companies bill Medicare and Medicaid to care for vulnerable patients, but provide grossly substandard care and medically unnecessary services just to boost company profits,” said Special Agent in Charge Steven J. Ryan of the Department of Health and Human Services, Office of Inspector General (HHS-OIG). “We will continue to crack down on medical providers who betray the public’s trust and the needs of vulnerable patients through fraudulent billing and irresponsible practices.”

“At a time when the cost of healthcare weighs heavy on many taxpayers, it is imperative that people who illegally bill our healthcare system are held accountable and forced to pay restitution,” said FBI Atlanta Special Agent in Charge David J. LeValley. “This case is an example of how committed the FBI and its partners are to keeping healthcare providers from abusing the system.”

The settlement, which was based on the company’s ability to pay, resolves allegations originally brought in lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act by Joanne Cretney-Tsosie, Jennifer Deaton, Kimberley Green, Camaren Hampton, Teresa McAree, Terri West, and Brian Wilson, former employees of companies acquired by Genesis. 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. The whistleblowers will receive a combined $9.67 million as their share of the recovery in this case.

This matter was handled by the Civil Division’s Commercial Litigation Branch; the U.S. Attorneys’ Offices for the Northern District of California, the Northern District of Georgia, the Western District of Missouri, and the District of Nevada and HHS-OIG.

The claims resolved by the settlement are allegations only; there has been no determination of liability.

The cases are docketed as United States, ex rel. Cretney-Tsosie v. Creekside Hospice II, LLC, Case No. 2:13-cv-167-HDM (D. Nev.); United States ex rel. McAree v. SunDance Rehabilitation Corp., Case No. 1:12-CV-4244 (N.D. Ga.); United States, ex rel. West v. Skilled Healthcare Group Inc., et. al., Case No. 11-02658-ED (N.D. Cal.); United States ex rel. Deaton v. Skilled Healthcare Group, Inc. et al., Case No. 4:14-cv-00219 (W.D. Mo.); and United States ex rel. Wilson v. Skilled Healthcare Group, Inc. et al., Case No. 14-cv-860 (W.D. Mo.).

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