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

A.G. Schneiderman Announces Joint $54 Million Settlement With Carecore Resolving Allegations Company Submitted Millions In False Claims To Medicaid

Attorney General Eric T. Schneiderman recently announced that New York, along with 20 other states, has reached an agreement in principle to join the federal government in a settlement with CareCore National LLC (CareCore), now part of eviCore healthcare that was unsealed today. CareCore provides utilization management services including determinations of medical necessity to New York Medicaid Managed Care Organizations (MCOs).  The agreement settles allegations that CareCore instituted a scheme to auto-approve or “Process As Directed” (“PAD”) hundreds of radiology service requests on a daily basis, deeming those diagnostic services as reasonable and medically necessary, even though there had been no evaluation of those cases by the appropriate medical personnel. CareCore will pay the federal government $54 million, of which $18 million will go to the state Medicaid programs, to resolve allegations that CareCore’s fraudulent “PAD” program caused false claims to be submitted to government health care programs. Of the $18 million, New York’s Medicaid Program will recover over $7.6 million.

“Companies that overbill Medicaid are undermining efforts to help some of our neediest citizens. Since 2011, my office has secured over $1 billion in restitution for Medicaid, and we will continue to vigorously safeguard the integrity of this incredibly vital program,” said Attorney General Schneiderman.

Specifically, the agreement in principle resolves allegations that from January 1, 2005 through June 13, 2013, CareCore developed and implemented the “PAD” program through which CareCore improperly approved over 200,000 prior authorization requests which CareCore initially determined could not be approved based on the information provided.  The states’ settlement in principle mirrors the federal settlement agreement regarding CareCore’s conduct that is the subject of the settlement. The federal settlement agreement was filed in federal court and contained CareCore’s admissions and acceptance of responsibility for conduct including:

  • Starting in at least 2007 through June 13, 2013, CareCore developed the “PAD” program, and thereafter the “PAD” Program consisted of its Clinical Reviewers improperly approving certain prior authorization requests awaiting physician review on the Medical Queue without having obtained any new objective medical information about the requests, and without a Medical Director having independently reviewed the prior authorization requests.
  • From 2007 through June 13, 2013, these “padded”requests were then transmitted to CareCore’s client insurers, including MCOs, as preauthorized requests.
  • From 2007 through June 13, 2013, when CareCore approved these padded requests, CareCore made a representation that it had appropriately reviewed the requests when it knew it had not. Thus, those padded requests incorporated CareCore’s false representation that it had approved a case after completing the required review process.

The settlement in principle resolves claims that CareCore auto-approved the requests in an effort to keep up with the volume of preauthorization requests for diagnostic radiology services and to avoid a contractual monetary penalty per case for untimely reviews.  The settlement in principle also resolves claims that this practice caused false or fraudulent claims to be submitted to and reimbursed by the State’s Medicaid program, including through its contracted MCOs, for diagnostic procedures that were not properly authorized as medically reasonable or necessary in a manner consistent with the policies and procedures set forth by New York’s Medicaid program and its contracted MCOs, using federal and state funds provided through Medicaid Managed Care.

The settlement in principle resolves allegations asserted in a qui tam action brought by a whistleblower in the United States District Court for the Southern District of New York. A multi-state team, which included New York’s Medicaid Fraud Control Unit, participated in the investigation and conducted the settlement negotiations with CareCore on behalf of the states. The team also included representatives of the Florida, Georgia and Ohio Medicaid Fraud Control Units. The states coordinated their investigation in conjunction with the U.S. Attorney’s Office for the Southern District of New York.

Oxygen Equipment Provider Pays $11.4 Million to Resolve False Claims Act Allegations

The Department of Justice announced yesterday that Braden Partners, L.P., doing business as Pacific Pulmonary Services, has agreed to pay $11.4 million to resolve allegations against it and its general partner, Teijin Pharma USA LLC, for violating the False Claims Act by submitting claims for reimbursement to Medicare and other federal healthcare programs for oxygen and related equipment supplied in violation of program rules, and for sleep therapy equipment supplied as part of a cross-referral kickback scheme with sleep clinics.

“This settlement demonstrates our continued pursuit of health care providers who take advantage of federal healthcare programs,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “We will investigate and take action against providers who cut corners and pay kickbacks.”

California-based Pacific Pulmonary Services furnishes stationary and portable oxygen tanks and related supplies, and sleep therapy equipment, such as Continuous Positive Airway Pressure, Bi-level Positive Airway Pressure masks and related supplies, to patients’ homes in California and other states. The government alleged that, beginning in about 2004, Pacific Pulmonary Services began submitting claims to the Medicare, TRICARE and Federal Employee Health Benefits programs for home oxygen and oxygen equipment without obtaining a physician authorization, as required by program rules.

Beginning in 2006, certain of the company’s patient care coordinators also allegedly agreed to make patient referrals to sleep testing clinics in exchange for those clinics’ agreement to refer patients to Pacific Pulmonary Services for sleep therapy equipment. The government alleged that this conduct violated the Anti-Kickback Act, which prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid and/or other federally funded programs.

“The U.S. Attorney’s Office is committed to taking all appropriate action against companies that disregard patients’ medical needs in pursuit of company profits,” said U.S. Attorney Brian J. Stretch for the Northern District of California. “Patients in federal health care programs expect and deserve medical care that is free from any undue influence and complies with the program safeguards that are in place to protect patients.”

“Home oxygen equipment and related supplies are some of the most fraudulently billed items of durable medical equipment,” said Special Agent in Charge Steven J. Ryan of the Office of Inspector General for the U.S. Department of Health and Human Services. “Medicare suppliers more concerned with profits than compliance will be met with investigation and enforcement.”

This settlement resolves allegations filed in a lawsuit by a former sales representative of Pacific Pulmonary Services, in federal court in San Francisco, California. The lawsuit was filed by Manuel Alcaine 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. Alcaine will receive $1.824 million of the recovered funds.

The settlement was the result of a coordinated effort by the U.S. Attorney’s Office of the Northern District of California, the Civil Division’s Commercial Litigation Branch, the U.S. Department of Health and Human Services Office of Inspector General, and the various other agencies that administer the federal health care plans at issue.

The case is captioned United States ex rel. Alcaine v. Braden Partners, L.P., dba Pacific Pulmonary Services, et al., Case No. 10-cv-4597 (N.D. Cal.). The claims resolved by the settlements are allegations only; there has been no determination of liability.

Encino Dermatologist Pays Nearly $2.7 Million to Resolve Allegations He Billed Medicare for Unnecessary Mohs Skin Cancer Surgeries

The owner of The Skin Cancer Medical Center in Encino has paid the United States nearly $2.7 million to resolve allegations that he submitted bills to Medicare for Mohs micrographic surgeries for skin cancers that were medically unnecessary.

Dr. Norman A. Brooks, M.D., a dermatologist and surgeon, paid the $2,681,400 settlement on April 10.

The settlement, which was finalized on March 31, resolved allegations in a lawsuit brought by a former employee of The Skin Cancer Medical Center. The settlement was announced today when prosecutors learned that United States District Judge Philip S. Gutierrez had unsealed and dismissed the complaint that was filed under the False Claims Act.

The lawsuit alleged that Brooks falsely diagnosed skin cancer in some of his patients so that he could perform, and bill for, Mohs surgeries.

Mohs surgery is a specialized surgical procedure for removing certain types of skin cancers in specific areas of the body, including the face. The surgery is performed in stages during which the surgeon removes a single layer of tissue which undergoes a microscopic evaluation. The surgeon performs additional stages, if necessary, until all of the cancer is removed.

Given the complexity and time required to perform the procedure, Mohs yields a higher Medicare reimbursement than other procedures used to remove skin lesions.

As part of the settlement, Brooks entered into a three-year Integrity Agreement with the U.S. Department of Health and Human Services, Office of Inspector General. Under the Integrity Agreement, Brooks will establish and maintain a compliance program that includes, among other things, mandated training for Brooks and his employees and review procedures for claims submitted to Medicare and Medicaid programs.

The settlement resolves allegations made in a lawsuit filed by former Brooks employee Janet Burke under the qui tam, or “whistleblower,” provisions of the False Claims Act, which permit private parties to sue on behalf of the government and receive a share of any recovery. For her role in the case, Ms. Burke will receive $482,652.

In settling the case, Brooks did not admit liability in the matter.

The matter was investigated by the United States Attorney’s Office and the U.S. Department of Health and Human Services, Office of Inspector General. The settlement was negotiated by Assistant United States Attorney Donald W. Yoo of the Civil Fraud Section.

The settlement resolved United States ex rel. Burke v. Norman A. Brooks, M.D., Inc. et al., CV14-6735.

Hospice Companies To Pay $12.2 Million To Settle Kickback Claims

U.S. Attorney John Parker of the Northern District of Texas announced Tuesday that International Tutoring Services, LLC, f/k/a International Tutoring Services, Inc., and d/b/a Hospice Plus; Goodwin Hospice, LLC; Phoenix Hospice, LP; Hospice Plus, L.P.; and Curo Health Services, LLC f/k/a Curo Health Services, Inc. have agreed to pay $12.21 million to resolve allegations that they violated the False Claims Act by paying kickbacks in exchange for patient referrals.  Curo Health Services is headquartered in Mooresville, North Carolina and operates eight hospice affiliates across 18 states. In September 2010, Curo Health Services purchased Hospice Plus, Goodwin Hospice, and Phoenix Hospice, and consolidated the hospice companies under the Hospice Plus brand, which operates primarily in and around Dallas, Texas.

The settlement resolves allegations brought by several whistleblowers that Hospice Plus, Phoenix Hospice, and Goodwin Hospice submitted claims to Medicare and Texas Medicaid that were rendered false as a result of the payment of kickbacks by the hospices, its owners and employees, and others. There were two alleged kickback schemes. First, from 2007 through 2012, kickbacks were allegedly paid to American Physician Housecalls, a physician housecall company, in exchange for patient referrals to these hospice companies. The alleged kickbacks took the form of sham loans, a free equity interest in another entity, stock dividends, and free rental space. Second, from 2007 through 2014, kickbacks were allegedly paid to medical providers, including doctors and nurses as well as hospitals and long-term care facilities, in exchange for patient referrals to these hospice companies. The alleged kickbacks took the form of cash, gift cards, and other valuable items.

We will not tolerate the payment of illegal kickbacks, which unjustly drive up the cost of health care,” said U.S. Attorney Parker. “Any health care provider who seeks to profit illegally at the expense of federal beneficiaries and taxpayers will face consequences.”

The allegations resolved by this settlement were raised in two consolidated whistleblower lawsuits in Dallas, Texas. The lawsuits were filed under the qui tam 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. In settling this matter, Curo Health Services did not admit any wrongdoing or liability.

In addition to reaching a settlement with these defendants, the United States also requested that the Court permit the United States to intervene in and prosecute the fraud claims against two former executives, Dr. Bryan White and Suresh Kumar. The case is captioned United States ex rel. Christopher Sean Capshaw, et al. v. Bryan K. White, et al.; Civil Action No. 3:12-cv-4457 (N.D. Tex.).

The Office of Inspector General of the U.S. Department of Health and Human Services and the FBI assisted in the investigation of this matter. The case is being handled by Assistant U.S. Attorneys Lindsey Beran and Kenneth Coffin.

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