Blog Archives

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.).

Dodge County Pharmacy and Pharmacist Agree To Pay Over $2 Million to Resolve False Claims Act and Controlled Substances Act Allegations

Rhine Drug Company and Andrew “Carter” Clements, Jr. agreed to pay a total of $2.175 million to resolve allegations that they violated the False Claims Act and the Controlled Substances Act. This settlement is the largest False Claims Act recovery with a pharmacy or pharmacist and largest recovery of civil penalties under the Controlled Substances Act in the history of the Southern District of Georgia.

The settlement resulted from a joint investigation by the Department of Health and Human Services, Office of the Inspector General (HHS-OIG), the Drug Enforcement Administration (“DEA”), and the United States Attorney’s Office for the Southern District of Georgia. Based on its investigation, the United States contended that Rhine Drug Company and Clements violated the False Claims Act by submitting claims to Medicare for drugs that Rhine Drug Company did not dispense to patients. The United States further contended that Rhine Drug Company and Clements violated the Controlled Substances Act by negligently failing to make, keep, or furnish certain records as required by federal law.

Acting United States Attorney James Durham said, “Pharmacists are supposed to bill only for what they dispense and they’re to keep accurate records of the prescription drugs they let walk out of their pharmacies. This U. S. Attorney’s Office will hold accountable those pharmacists and pharmacies that seek financial gain at the expense of the public by cutting corners.”

“Billing Medicare for prescription drugs that were never dispensed to patients is a serious allegation,” said Derrick L Jackson, Special Agent in Charge of the HHS-OIG Office in Atlanta. “Our agency, in concert with our law enforcement partners, is dedicated to safeguarding the integrity of all federally funded health care programs.”

“Americans rely on medical professionals, to include pharmacists and pharmacy owners, to keep accurate records of controlled substances, and the DEA is committed to stopping individuals from engaging in such unlawful acts,” said Daniel R. Salter, the Special Agent in Charge of the DEA Atlanta Field Division. “We are satisfied that Rhine Drug Company and Clements are being held accountable for their alleged violations of the law.”

Rhine Drug Company and Clements fully cooperated with the investigation and promptly approached the United States to reach a resolution. The claims resolved by this settlement are allegations only; there has been no determination of liability. While this settlement fully resolves the allegations against Clements and Rhine Drug Company, investigations remain ongoing as to others.

The case was investigated by HHS-OIG Special Agent Martin Rowe; DEA Diversion Investigators Josh Barnes and Saul Melendez; Investigator Kimberly Reinken-Creamer of the United States Attorney’s Office, Southern District of Georgia; and Law Clerk Alison Slagowitz of the United States Attorney’s Office, Southern District of Georgia. The United States was represented by Assistant United States Attorney J. Thomas Clarkson.

Union Treatment Center to Pay $3 Million and Be Permanently Excluded from Federal Health Care Programs under False Claims Act Settlement

Union Treatment Center (“UTC”), a medical and physical therapy provider with clinics in Austin, Killeen, San Antonio, and Corpus Christi, will pay $3 million to settle civil health care fraud allegations, announced U.S. Attorney Richard L. Durbin, Jr. Under the settlement, UTC will also waive claims for payment exceeding $1.6 million and be permanently excluded from participating in federal health care programs. The settlement partially resolves a lawsuit under the False Claims Act alleging that UTC perpetrated a scheme to defraud the federal workers’ compensation program (“FECA program”).

“Today’s settlement reflects our commitment to combatting fraud in the federal health care system,” said U.S. Attorney Richard L. Durbin, Jr. “We will use all of the tools at our disposal, including civil litigation under the False Claims Act, to ensure the integrity of federally funded programs.”

The U.S. Department of Labor, Office of Workers’ Compensation Programs (“OWCP”) administers the FECA program, which covers roughly 3 million federal civilian and postal employees for job-related injuries. Benefits include payment of an injured worker’s medical and rehabilitation expenses. OWCP uses federal funds to reimburse health care providers that treat covered workers.

“UTC and its executives submitted false claims to the Office of Workers’ Compensation Programs under the guise that they were treating injured American workers pursuant to the Federal Employees’ Compensation Act. The U.S. Department of Labor’s Office of Inspector General will continue to work with our law enforcement partners to vigorously investigate medical providers who attempt to fraudulently obtain money from Department of Labor Programs intended to treat injured workers,” said Steven Grell, Special Agent in Charge, Dallas Regional, U.S. Department of Labor, Office of Inspector General.

“The Office of Workers’ Compensation Programs considers program integrity and fraud detection and prevention a top priority. We thank the law enforcement community for their investigative efforts – we also thank DOJ for their hard work in resolving this case. This settlement sends a strong signal to providers who submit false health care claims to the government that they will be held accountable for their actions.” Gary A. Steinberg – Deputy Director of OWCP, United States Department of Labor.

UTC claimed to specialize in treating workplace injuries. The company marketed itself to patients covered by the FECA program, targeting in particular unionized postal workers in Austin and San Antonio and civilian Army employees in the Corpus Christi area. In its civil complaint, the United States alleged that UTC, Garry Craighead, UTC’s former Chief Executive Officer, and Christine Craighead, its former Chief Operating Officer, orchestrated a scheme to overcharge OWCP for services and supplies allegedly rendered to patients covered by the FECA program. The United States asserted that, between January 1, 2009, and December 31, 2012, UTC fraudulently billed the FECA program for services it did not render; routinely overcharged for medical examinations; falsely inflated the time patients spent in therapy; and, billed for unnecessary services and supplies. The United States also accused UTC of offering, paying, soliciting, and receiving kickbacks in exchange for patient referrals. The government’s allegations may be found in a qui tam lawsuit captioned United States ex rel. Wheeler v. Union Treatment Centers, LLC, et al., no. SA:13-cv-4-XR (W.D. Tex.) The settlement agreement is not an admission of liability by UTC.

“The workers’ compensation program benefits thousands of postal employees who have received legitimate on-the-job injuries. This investigation should send a clear message to all healthcare providers that workers’ compensation fraud is a federal crime that carries serious consequences and will not be tolerated,” said Special Agent in Charge Maximo Eamiguel, U.S. Postal Service Office of Inspector General Southern Area Field Office. “The USPS-OIG, along with our law enforcement partners, will continue to aggressively investigate those who engage in fraudulent activities intended to defraud federal benefit programs and the United States Postal Service.”

“This settlement further demonstrates the resolve of USACIDC”s Major Procurement Fraud Unit and our law enforcement partners to protect and defend the assets of the United States Army,” stated Frank Robey, director, USACIDC Major Procurement Fraud Unit.

The settlement with UTC is part of a larger enforcement initiative. Garry Craighead is currently serving a 14-year term of imprisonment as a result of his guilty plea to kickback and money laundering charges. The Court ordered Craighead to pay OWCP nearly $18 million in restitution for the damage he caused to the FECA program. His criminal case may be found at United States v. Garry Wayne Craighead, no. A:15-cr-348 (W.D. Tex.) Christine Craighead is awaiting trial on conspiracy, wire fraud, kickback, and aggravated identity theft charges. Her trial is set for October 30, 2017. The criminal case is captioned United States v. Christine Ann Craighead, 1:17-cr-88 (W.D. Tex.)

“Along with criminal prosecution, the FBI is committed to pursuing administrative and civil remedies with the United States Attorney’s Office, and our partner investigative agencies, to prevent, deter, and recover government losses sustained by fraud waste and abuse,” stated FBI Special Agent in Charge Christopher Combs, San Antonio Division.

The United States Postal Service Office of the Inspector General, United States Army Criminal Investigation Command’s Major Procurement Fraud Unit, Federal Bureau of Investigation, and United States Department of Labor Office of the Inspector General conducted the investigation for the United States. Assistant United States Attorney John J. LoCurto and Auditor Jamie Cole, CPA handled the investigation for the United States Attorney’s Office.

Fredericksburg Hospitalist Group Pays $4.2 Million to Settle Civil Fraud Case

Fredericksburg Hospitalist Group, P.C. (FHG), and 14 of its member shareholders have agreed to pay approximately $4.2 million to settle a federal False Claims Act (FCA) case brought under the qui tam whistleblower provisions of the FCA.

“Rooting out fraudulent billing by healthcare providers is a priority,” said Dana J. Boente, U.S. Attorney for the Eastern District of Virginia. “This office will continue to pursue such matters vigorously.”

The whistleblower complaint, which was originally filed under seal, alleged that FHG and its member hospitalists knowingly and intentionally upcoded evaluation and management (E&M) codes to the highest code levels in billing Medicare and other federal healthcare payors in connection with their providing hospitalist services to patients at Mary Washington Hospital and Stafford Hospital. After an investigation into the matter, the United States alleged that from January 2010 through April 2015, the defendants knowingly and intentionally increased the level of E&M codes to the highest code levels, resulting in increased reimbursement amounts paid by the federal healthcare payors to the billing defendants.

“Whether it’s upcoding, billing for undelivered services, or delivery of substandard care, our nationally renowned Medicaid Fraud Control Unit will never stop working to root out fraud, waste, and abuse that steals from taxpayers and weakens these important programs for Virginians who need these services,” said Mark Herring, Virginia Attorney General.

The whistleblower, also known as a “relator,” alleged that the defendants’ conduct violated the FCA. In such cases, the United States has an opportunity to investigate the claims. Under the FCA relators may be awarded up to 25 percent, or more, of amounts collected.

The resolution obtained in this matter was the result of a coordinated effort between the U.S. Attorney’s Office for the Eastern District of Virginia, the Virginia Medicaid Fraud Control Unit within the Office of the Virginia Attorney General, the Department of Health and Human Services, Office of Inspector General, the Defense Criminal Investigative Service, and the U.S. Office of Personnel Management, Office of the Inspector General.

The matter was investigated by Assistant U.S. Attorney Robert McIntosh, and Assistant Attorney Generals Vincent J. Vaccarella and Adele M. Neiburg. The civil claims settled by this FCA agreement are allegations only; there has been no determination of civil liability.

Medicare Advantage Organization and Former Chief Operating Officer to Pay $32.5 Million to Settle False Claims Act Allegations

Freedom Health Inc., a Tampa, Florida-based provider of managed care services, and its related corporate entities (collectively “Freedom Health”), agreed to pay $31,695,593 to resolve allegations that they violated the False Claims Act by engaging in illegal schemes to maximize their payment from the government in connection with their Medicare Advantage plans, the Justice Department recently announced. In addition, the former Chief Operating Officer (COO) of Freedom Health Siddhartha Pagidipati, has agreed to pay $750,000 to resolve his alleged role in one of these schemes.

“When entering into agreements with managed care providers, the government requests information from those providers to ensure that patients are afforded the appropriate level of care,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Today’s result sends a clear message to the managed care industry that the United States will hold managed care plan providers responsible when they fail to provide truthful information.”

The government alleged that Freedom Health submitted or caused others to submit unsupported diagnosis codes to CMS, which resulted in inflated reimbursements from 2008 to 2013 in connection with two of their Medicare Advantage plans operating in Florida. It also alleged that Freedom Health made material misrepresentations to CMS regarding the scope and content of its network of providers (physicians, specialists and hospitals) in its application to CMS in 2008 to expand in 2009 into new counties in Florida and in other states. The government’s settlement with Mr. Pagidipati resolves his alleged role in this latter scheme.

“Medicare Advantage plans play an increasingly important role in our nation’s health care market,” said Acting U.S. Attorney Stephen Muldrow. “This settlement underscores our Office’s commitment to civil health care fraud enforcement.”

“Medicare Advantage insurers must play by the rules and provide Medicare with accurate information about their provider networks and their patients’ health,” said Chief Counsel to the Inspector General Gregory Demske of the Department of Health and Human Services Office of Inspector General (HHS-OIG). “OIG will investigate and hold managed care organizations accountable for fraud. Moving forward, the innovative CIA reduces the risks to patients and taxpayers by focusing on compliance issues unique to Medicare Advantage plans.”

The allegations resolved by these settlements were brought in a lawsuit under the qui tam, or whistleblower, provisions of the Federal False Claims Act and the Florida False Claims Act. These statutes permit private parties to sue on behalf of the government for false claims and to receive a share of any recovery. The whistleblower in this action is Darren D. Sewell, who was a former employee of Freedom Health. The whistleblower’s share in this case has not yet been determined.

The corporate entities related to Freedom and which were part of today’s settlements are: Optimum HealthCare Inc., America’s 1st Choice Holdings of Florida LLC, Liberty Acquisition Group LLC, Health Management Services of USA LLC, Global TPA LLC, America’s 1st Choice Holdings of North Carolina LLC, America’s 1st Choice Holdings of South Carolina LLC, America’s 1st Choice Insurance Company of North Carolina Inc. and America’s 1st Choice Health Plans Inc.

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

The claims resolved by the settlements are allegations only, and there has been no determination of liability. The case is captioned United States ex rel. Sewell v. Freedom Health, Inc., et al., Case No. 8:09-cv-1625 (M.D. Fla.).

United States Intervenes in Second False Claims Act Lawsuit Alleging that UnitedHealth Group Inc. Mischarged the Medicare Advantage and Prescription Drug Programs

For the second time in two weeks, the United States has filed a complaint against UnitedHealth Group Inc. (UHG) that alleges UHG knowingly obtained inflated risk adjustment payments based on untruthful and inaccurate information about the health status of beneficiaries enrolled in UHG’s Medicare Advantage Plans throughout the United States, the Justice Department announced yesterday.   This action follows the government’s filing of a complaint earlier this month in United States ex rel. Swoben v. Secure Horizons, a related action that also alleges that UHG submitted false claims for payment to the Medicare Program.

“The Department of Justice’s pursuit of this matter illustrates its firm commitment to ensure the integrity of the Medicare Program, including those parts of the program that rely on the services of Medicare Advantage Organizations,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.

UHG is the nation’s largest Medicare Advantage Organization, with more than 50 Medicare Advantage and Drug Prescription plans providing healthcare services and prescription drug benefits to millions of Medicare beneficiaries throughout the United States. receives a monthly “risk adjustment” payment from Medicare for each enrolled beneficiary. The risk adjustment payments are based, in significant part, on the health status of the beneficiary, which are reflected by diagnosis that receives from treating physicians and subsequently submits to Medicare for each beneficiary.

The complaint filed today by the United States alleges that UHG knowingly disregarded information about beneficiaries’ medical conditions, which increased the risk adjustment payments UHG received from Medicare. In particular, the lawsuit contends that, for many years, UHG conducted a national Chart Review Program designed to identify additional diagnoses not reported by treating physicians that would increase UHG’s risk adjustment payments. However, UHG allegedly ignored information from these chart reviews showing that hundreds of thousands of diagnoses provided by treating physicians and submitted by it to Medicare were invalid and did not support the Medicare payments it had previously requested and obtained. By ignoring this information, UHG avoided repaying Medicare monies to which it was not entitled.

The complaint also alleges that UHG ignored information about invalid diagnoses from health care providers with financial incentives to furnish such diagnoses. These providers received payments from UHG tied to the amount of payments that UHG received from Medicare, and thus benefitted financially from any increase in Medicare payments resulting from the diagnoses they provided. UHG allegedly knew that its financial arrangements with these providers created a strong incentive for and increased the risk of these providers to report invalid diagnoses. UHG’s own reviews of these providers’ medical records confirmed that the providers were reporting invalid diagnoses. But upon obtaining such evidence, UHG knowingly avoided further efforts to identify invalid diagnoses from these providers and repay Medicare monies to which neither it nor these providers were entitled.

“To ensure that the program remains viable for all beneficiaries, the Justice Department remains tireless in its pursuit of Medicare fraud perpetrated by healthcare providers and insurers,” said Acting U.S. Attorney Sandra R. Brown for the Central District of California. “The primary goal of publicly funded healthcare programs like Medicare is to provide high-quality medical services to those in need – not to line the pockets of participants willing to abuse the system.”

“As the nation’s largest Medicare Advantage Organization, UHG received substantial overpayments based upon untruthful and inaccurate information about the health status of those enrolled in its plans,” said Acting U.S. Attorney James P. Kennedy Jr. for the Western District of New York. “Such fraudulent spending of taxpayer’s dollars will not be tolerated.”

“With approximately one third of Medicare beneficiaries enrolled in Medicare Advantage plans, careful investigation of charges is more important than ever,” said Special Agent in Charge Scott J. Lampert of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG). “People receiving health care through these programs and taxpayers deserve nothing less.”

The lawsuit was filed by Benjamin Poehling, the former finance director for the UHG group that managed UHG’s Medicare Advantage Plans. The lawsuit was filed under the qui tam provisions of the False Claims Act, which permit private parties to sue on behalf of the United States for false claims for government funds, and to receive a share of any recovery. The False Claims Act permits the government to intervene in such a lawsuit, as it has done, in part, in this case.

The government’s intervention in this matter illustrates the government’s emphasis on combating healthcare 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 800-HHS-TIPS (800-447-8477).

This matter was investigated by the Civil Division’s Commercial Litigation Branch, the U.S. Attorneys’ Offices for the Western District of New York and the Central District of California and HHS-OIG.

The claims asserted against UHG are allegations only, and there has been no determination of liability.

Omnicare Inc. Agrees To $8 Million Settlement In False Claims Act Case

NEWARK, N.J. – The U.S. Attorney’s Office of the District of New Jersey, the U.S. Department of Justice and 28 states have reached an $8 million settlement with Omnicare Inc. resolving allegations arising from a whistle-blower suit filed under the False Claims Act.  The agreement was announced yesterday by Acting U.S. Attorney William E. Fitzpatrick.

The settlement follows an investigation by the U.S. Attorney’s Office of the District of New Jersey and the Commercial Litigation Branch of the Justice Department’s Civil Division. The United States alleged that Omnicare, in an effort to increase business efficiency and profit, designed and implemented an automated label verification system at certain locations that utilized a less specific drug code – known as “MEDID” – during its automated Stage II pharmacist verification process, instead of the more specific National Drug Code (NDC).

This system resulted in the submission by Omnicare of claims for generic drugs different from those actually dispensed to Medicare and Medicaid beneficiaries. It also resulted in the dispensing of drugs with patient-specific labels displaying the incorrect manufacturer or NDC.  The government alleged that the false manufacturer and NDC information on the labels, and within Omnicare’s electronic dispensing information, affected Omnicare’s ability to properly track and, if necessary, conduct patient-level recalls of such drugs.

“Ensuring accuracy in the dispensing of and billing for medication in the Medicare Part D and Medicaid Programs, especially to long-term care patients, is vital to public safety,” Acting U.S. Attorney Fitzpatrick said.

The relators, or whistler-blowers, in the underlying qui tam will receive more than $2 million as their statutory share of the recovery and to resolve their employment based claims in accordance with the False Claims Act. The civil lawsuit was filed in the District of New Jersey and is captioned U.S. et al. ex rel. Elizabeth Corsi and Christopher Ezzie v. Omnicare Inc.

Acting U.S. Attorney Fitzpatrick credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, and special agents from the Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Scott J. Lampert, for the investigation leading to the settlement.

The government is represented by the U.S. Attorney’s Office District of New Jersey, Deputy Chief, Civil Division, David Dauenheimer and Assistant U.S. Attorney Bernard Cooney of the Office’s Health Care and Government Fraud Unit, and the Department of Justice’s Civil Division, Senior Litigation Counsel Laurie A. Oberembt. The Office of Inspector General and the Office of the General Counsel for the Centers for Medicare and Medicaid Services of the Department of Health and Human Services also participated in the investigation and settlement.

The U.S. Attorney’s Office reorganized its health care practice in 2010 and created a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since that time, the office has recovered more than $1.33 billion in health care and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act, and other statutes.

Counsel for relators: Charles C. Goetsch Esq., New Haven, Connecticut.
Counsel for defendant: Michael Martinez Esq., New York

Page 5 of 15« First...34567...10...Last »