Articles Posted in Health Care Fraud

On Friday, the United States Attorney for the Western District of Oklahoma and the Attorney General for the State of Oklahoma jointly announced that Ocean Dental, P.C. has agreed to pay $5 million to settle civil claims stemming from allegations that it violated the False Claims Act by submitting fraudulent Medicaid claims. Oklahoma-based Ocean Dental operates 28 clinics in seven states. As part of its practice, it provides dental services to patients, including children, covered by the Oklahoma’s Medicaid program. The federal government and the state of Oklahoma specifically alleged that Ocean Dental submitted false claims for payment to the Oklahoma Medicaid program for dental restorations that took place during the period from January 1, 2005 through September 30, 2010. Claims for dental restorations furnished to Medicaid beneficiaries by Ocean Dental’s then-employee Robin Lockwood, D.D.S., were false because they were either not performed, or upcoded by billing for more restored surfaces than were actually performed. Continue reading ›

The U.S. Department of Justice announced today that DaVita Healthcare Partners, Inc. (“DaVita”) has agreed to pay nearly $400 million to resolve allegations that it violated the False Claims Act by paying kickbacks to induce the referral of patients to its dialysis clinics. DaVita is headquartered in Denver, Colorado and is one of the leading providers of dialysis services in the United States with dialysis clinics across 46 states and the District of Columbia. DaVita had allegedly identified physicians or physician groups that had significant patient populations suffering from renal disease and offered them lucrative opportunities to partner with the company by acquiring or selling an interest in the dialysis clinics to which their patients would be referred to for treatment. DaVita also allegedly ensured referrals of these patients to the clinics using a series of secondary agreements with the physicians.

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On Friday, the U.S. Department of Justice announced that Illinois-based global pharmaceutical and health care products company Abbott Laboratories (“Abbott”) has agreed to pay $5.4 million to settle a whistleblower’s allegations that it violated the False Claims Act by paying illegal kickbacks to doctors in order to induce them to implant the company’s carotid, biliary and peripheral vascular products.

United States ex rel. Peters et al. v. Abbott Laboratories, Inc. was filed by former Abbott employees Steven Peters and Douglas Gray and specifically alleged that the company violated the Anti-Kickback Act by paying prominent, well-known physicians for teaching assignments, speaking engagements, and conferences with the underlying expectation that these physicians would then arrange for the hospitals with which they were affiliated to purchase Abbott’s carotid, biliary and peripheral vascular products. Carotid and peripheral vascular products are used to treat circulatory disorders by increasing blood flow to the head and various parts of the body while biliary products are used to treat obstructions that occur in the bile ducts.

The qui tam provisions of the False Claims Act allow private parties to bring suit on behalf of the government and is a powerful tool for uncovering fraud. A successful suit entitles the whistleblower, also known as a relator, to between 15% and 30% of any final judgment or settlement. As part of the settlement reached in this case, Peters and Gray will receive a total payment of more than $1 million. Dating back to 1863, the False Claims Act has enabled relators with direct and independent knowledge of fraud by hospitals, health care facilities, health care providers, medical device manufacturers, and pharmaceutical companies to help recover taxpayer dollars. The statute also provides relators with considerable protection from employer retaliation. The government’s total recovery under the False Claims Act since January 2009 has amounted to $17 billion. Of this total, $12.2 billion was recovered from cases involving fraud on government health care programs.

On July 29th, the US Attorney’s Office in Boston and the Department of Health and Human Services announced a settlement with Beth Israel Deaconess Medical Center that resolves False Claims Act allegations of improper Medicare billing.  Although the billing in question took place between June 2004 and March 2008, the Boston Globe has reported that the government subpoenaed records from Beth Israel Deaconess in 2010 in connection with the case.

According to the US Attorney’s Office release, the government’s False Claims Act case accused the hospital of inappropriately submitting claims for reimbursement to Medicare for one-day stay inpatient admissions for patients with congestive heart failure, chest pain, and certain digestive and nutritional disorders.  The government contended that such claims should not have been for inpatient services, but for observation services, as they were admitted only for the purpose of observation and discharged the next day.  According to the government, additional claims to Medicare for inpatient services for “zero day” (less than one day) admissions were also inappropriate.

Beth Israel Deaconess did not admit to any wrongdoing or liability as part of the settlement; according to the Globe, Beth Israel Deaconess general counsel Jamie Katz said in a written statement that the billing “involved an extremely technical issue.”

Techota LLC, a home health care company, has agreed to a $150,000 settlement agreement with the United States to resolve all claims of liability under the federal False Claims Act. According to a complaint filed under the qui tam (whistleblower) provisions of the Act, Techota provides home health care services in Alabama, operating under the names CV Home Health of Bibb County and CV Home Health Services. The False Claims Act is an anti-fraud statute which imposes liability on individuals and companies that submit or cause to be submitted false claims for payment to the government. The complaint alleged that Techota submitted false claims for payment to Medicare, seeking reimbursement for home health care services that were either not medically necessary or not provided pursuant to an appropriate care plan as required by law. Providers must agree to the terms and conditions of the program in order to participate in Medicare, and participating providers must certify that all services for which reimbursement is sought are medically necessary. Federal regulations also require home health care providers to develop care plans and administer medical services pursuant to those plans. Billing for medically unnecessary products and services gives rise to liability under the False Claims Act. In addition to the $150,000 payment, Techota has also entered into a corporate integrity agreement with the Office of the Inspector General of Health and Human Services, a remedy often employed by the Justice Department in health care fraud cases to ensure continued oversight and monitoring of compliance with federal laws governing health care.

The qui tam suit was initially filed in Alabama federal court by whistleblower Veronica McDonald, a former employee of Techota. Under the qui tam provisions of the False Claims Act, private individuals with knowledge of fraud perpetrated against the United States have standing to file complaints on behalf of the government. After an initial statutory investigation period, the government decides whether or not to intervene in a particular case, but relators may proceed with their claims even if the government declines to intervene. Under the statute, violators are subject to treble damages and civil penalties of as much as $11,000 per false claim; whistleblowers (known as relators) stand to receive an award ranging between 15% and 30% of the government’s total recovery. For filing her qui tam complaint that ultimately led to the settlement with Techota, McDonald will receive an award of $22,500.

In recent years, amendments to the False Claims Act have aimed to expand the ambit of the statute’s anti-fraud provisions and increase the anti-retaliation protections available to whistleblowers. In the wake of passage of the Fraud Enforcement and Recovery Act of 2009, the Dodd-Frank Financial Reform law in 2010, and the Patient Protection and Affordable Care Act (“PPACA”) in 2010, the government has begun to vigorously pursue cases of financial fraud and mortgage and lending fraud. PPACA also included provisions amending the False Claims Act designed to increase the tools available to prosecute claims of health care fraud and abuse.

New Jersey-based Cooper Health System and Cooper University Hospital have agreed to a $12.6 million settlement to resolve claims of Medicare and Medicaid fraud in violation of the False Claims Act. The agreement was the result of a multi-year investigation by the United States Department of Justice (“DOJ”) and the New Jersey Attorney General’s Office; the government learned of the alleged conduct through disclosures  by Dr. Nicholas DePace in a qui tam suit filed in 2008.

Dr. DePace filed suit under the qui tam provisions of the False Claims Act, which allow private whistleblowers (referred to as “relators”) with knowledge of fraud to file suit on behalf of the government. The federal False Claims Act dates back to 1863, enacted to combat war profiteering during the Civil War. Thirty states and three municipalities have enacted statutes modeled on the federal law, including qui tam provisions providing for private rights of action for qui tam relators. Dr. DePace is a prominent Philadelphia-area cardiologist.

The government alleged that the Cooper Health System and hospital (“Cooper”) paid millions of dollars in remuneration to physicians in order to induce referrals in violation of the Anti-Kickback Statute (“AKS”). The AKS makes it a felony for any person to offer, solicit, receive, or pay remuneration in connection with a referral for services that are eligible for reimbursement under a federal health care program such as Medicare or Medicaid. Medicaid is a program that is administered by both the federal government and the states, and consequently state attorneys general frequently investigate and assist in prosecuting Medicaid fraud under state false claims acts. Both the United States and the State of New Jersey intervened in Dr. DePace’s qui tam complaint. Under the False Claims Act, the government has an initial 60-day period in which to determine whether or not to intervene in a qui tam suit, but relators may continue to pursue their claims privately even if the government declines to intervene.

American Sleep Medicine LLC, a Florida-based company that owns 19 diagnostic sleep testing centers throughout the United States, has agreed to pay over $15.3 million to resolve claims that it submitted false claims for payment to Medicare and two other federal health insurance programs in violation of the False Claims Act. The government alleged that the company billed Medicare, the Railroad Retirement Medicare Program, and TRICARE (a military health care program) for sleep diagnostic services performed by technicians who lacked the requisite certifications under the federal programs. Under the health programs, sleep technicians must be credentialed by a state or federal licensing body, and the government alleged that American Sleep Medicine knew that technicians who lacked such credentials were performing tests for which reimbursement was sought. Consequently, several federal programs and departments, including the Department of Defense (which administers TRICARE) as well as the federal Medicare program, paid for sleep testing services that were ineligible for reimbursement.

The United States Department of Justice (“DOJ”) was apprised of the allegations through the disclosure filed in a private whistleblower suit by relator (whistleblower) Daniel Purnell. The suit was filed under the qui tam provisions of the False Claims Act, which allow private individuals (known as relators) to sue on behalf of the government for fraud perpetrated against the government. Under the statute, qui tam relators must disclose the allegations to the government, and subsequently federal investigators have an initial 60-day period in which to review the claims and determine whether or not the federal government will intervene in the litigation. If the government declines to intervene, relators may elect to continue prosecuting their claims; if they prevail, relators stand to recover between 15% and 30% of any final judgment or settlement. Increasingly, government recoveries under the False Claims Act, which soared to a record $5 billion for the year 2012 alone, have come to depend upon information arising out of qui tam complaints. Qui tam recoveries are particularly significant in cases of fraud and abuse in federal health programs, which intake billions of dollars in claims on an annual basis and operate by complicated billing codes. In addition to fraudulent billing, False Claims Act liability exists in cases where individuals or providers knowingly retain overpayments from the government (referred to as “reverse false claims”). Courts continue to recognize a growing number of types of fraud under the False Claims Act, including mortgage and financial fraud, health care fraud and abuse, federal contracting fraud, and off-label promotion of drugs by pharmaceutical manufacturers. For his participation in the American Sleep Medicine case, Mr. Purnell will receive an award of over $2.6 million.

Thirty states have enacted their own versions of the federal False Claims Act, and state treasuries, too, have seen the recovery of billions of dollars to state Medicaid funds, state health insurance programs (e.g., Medi-Cal, a state health program for beneficiaries in the State of California), and state contracts and programs. Since 2009, the federal law also contains strong protections for contractors, agents, and employees against retaliation for conduct protected under the Act. Any employee, contractor, or agent who takes lawful efforts to stop a violation of the False Claims Act may seek the law’s anti-retaliation protections.

A subsidiary of Orthofix International SV, Blackstone Medical Inc., has agreed to pay the federal government $30 million to resolve allegations that Blackstone remunerated doctors with illegal kickbacks in order to induce the use of its products. Orthofix is a manufacturer of spinal implants and other products used in spinal surgeries. The government’s complaint, filed under the federal False Claims Act, alleges that Blackstone offered kickbacks to spinal surgeons in order to incentivize orders of its products; the payments are alleged to have been made in numerous guises, including so-called “consulting agreements,” payment of royalties, research grants, travel, and even entertainment. These sorts of payments to doctors may constitute violations of the Anti-Kickback Statute, a federal law that makes it a criminal offense to offer or receive payments in order to induce the utilization of health care products and services. In addition to being prosecuted criminally, violators of the Anti-Kickback Statute often face civil liability under the False Claims Act, the vehicle through which such claims are frequently resolved by the federal government. As part of its settlement with the federal government, Blackstone has agreed to a corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services, one of the regulatory agencies charged with enforcing anti-fraud laws in the health care sector. Corporate integrity agreements ensure that companies put into place more rigorous oversight and compliance procedures.

The government became apprised of the kickback allegations as a result of a complaint filed under the qui tam (whistleblower) provisions of the False Claims Act. The whistleblower, Susan Hutcheson, is expected to receive $8 million as an award for her participation in the litigation. When a whistleblower (known as a qui tam relator) files a complaint under the False Claims Act, the complaint is sealed and the government has 60 days to review the allegations. Although the government may choose to intervene in the relator’s qui tam complaint, it often does not do so, and relators may proceed with their claims even if there is no government intervention. As was the case in the Blackstone Medical case, the federal government often intervenes for settlement purposes.

Fraud and abuse in federal health insurance programs are pervasive, and the government has increasingly turned to the False Claims Act (particularly qui tam suits) to combat myriad types of fraud, including illegal promotion of drugs by pharmaceutical companies, overbilling of Medicare by providers, and violations of federal laws such as the Anti-Kickback Statute.  The government has recovered $9.5 billion since January 2009 in cases involving fraud against federal health care programs, and total recoveries in False Claims Act cases since January 2009 exceed $13.2 billion.