Articles Posted in Health Care Fraud

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Supreme Court Pillars

WellCare Health Plans, Inc. reached a settlement with the federal government this week over allegations that the company to Medicare, Medicaid, and other government health programs, all in violation of the False Claims Act.  The Tampa-based health insurer will pay $137.5 million to the United States, nine individual states, and four qui tam lawsuits filed by former employees with knowledge of fraud at the company.  Under the False Claims Act, an employee or any other private citizen may bring a lawsuit on behalf of the United States for violations of the False Claims Act.

In addition to resolving civil claims under the False Claims Act, the Department of Justice has agreed to release WellCare from a three-year Deferred Prosecution Agreement (DPA) originally entered into in May of 2o09 after agreeing to pay $80 million to resolve a criminal investigation which had resulted in one guilty plea and criminal charges against five additional WellCare executives.  Under the DPA, WellCare was guaranteed immunity from further criminal charges in exchange for demonstrated remedial efforts and compliance with federal and state health care laws.

Many states have enacted state False Claims Acts in order to share in recoveries obtained in multi-state and federal prosecutions and to further encourage reporting of fraud by state residents.  Indeed, of the nine individual states involved in the WellCare settlement, Connecticut, Florida, Georgia, Hawaii, Illinois, Indiana, Missouri, and New York all currently have state False Claims Acts.  Although Ohio does not have a state False Claims Act, residents of the state may still bring a qui tam action under the federal False Claims Act.

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Cayuga Medical Center, located in Ithica, New York, recently settled False Claims Act allegations that the medical center submitted false claims for payment under Medicare and Medicaid.  The government’s investigation was initiated and aided by Daniel S. Jorgenson, a physician practicing in the Ithica area who came forward as a whistleblower under the “qui tam” provision of the False Claims Act.

The settlement resolves allegations that Cayuga violated the Stark law, which prohibits physicians from referring patients to certain providers in which the physician has a financial interest.  The False Claims Act requires that all claims for payment under Medicare, Medicaid, and other federal health programs comply with all federal laws and regulations, including the Stark Law.  Because Cayuga’s recruiting agreements and payments to physicians violated the Stark Law, the organization was subject to civil liability under the False Claims Act.

Under the settlement, Cayuga will pay over $3.5 million to resolve pending False Claims Act allegations and engage in corrective action.  Under New York’s state False Claims Act, the state will be able to recover a share of $426,305 for false claims implicating state funds through the state’s Medicaid program.

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hospital2A new trend in healthcare fraud enforcement reflects a willingness by hospitals to be more forthcoming. Detroit Medical and St. Mary’s Medical Center in Pennsylvania recently reported improper financial relationships with physicians — voluntarily. Detroit Medical entered into a $30 million settlement agreement with the U.S. government stemming from violations of the False Claims Act, the Anti-Kickback Statute, and the Stark Statute. The violations were discovered while Vanguard, in preparation for its acquisition of DMC, was investigating DMC’s potential liabilities. Continue reading ›

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The Justice Department recently announced the $280 million settlement of a False Claims Act case against Dey Pharmaceuticals, of which $67.2 million will be awarded to whistleblower Ven-A-Care.

Yellow and Red PillsThe case accused Dey of reporting false and inflated prices for four drugs used to treat asthma and respiratory conditions. Federal health care programs rely on drug companies to report the “Average Wholesale Price” of a drug in order to set reimbursement rates. Dey allegedly inflated these prices so that physicians and pharmacists could obtain reimbursement rates higher than the initial purchase price of the drugs. Essentially functioning as a form of kickback, Tony West, Assistant Attorney General for the Civil Division of the Department of Justice, warns of the danger of this practice, stating “Taxpayer-funded kickback schemes like this not only cost the federal health care programs millions of dollars, they threaten to undermine the integrity of the choices health care providers make for their patients.”

For former Florida home-infusion company-turned professional whistleblower, this represents one of many successful health care fraud cases settled this month. The organization also settled with Abbott Laboratories, Roxane Laboratories, and B. Braun Medical for over $2 billion dollars, and earning a reward of $88.4 million.

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Jeffrey Friedlander, physician at the Neurology & Pain Center in Tampa, was recently convicted of Medicare fraud and drug conspiracy through his participation in a “pill mill.” Friedlander facilitated a drug-trafficking scheme by signing blank prescriptions, used to obtain powerful pain killers that were then sold on the street. Centers such as Friedlander’s are being dubbed the new face of health care fraud.

Clinic employees filed bogus Medicare claims for tests and procedures never performed, and billed Medicare for painkillers with fake patient profiles. Continue reading ›

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In wake of many of the recent, massive pharmaceutical fraud settlements, government officials are exploring the possibility of holding pharmaceutical executives criminally liable for their company’s off-label promotion efforts. Despite the occurrence of massive settlements, many commentators and legal analysts believe they are simply the cost of doing business within the pharmaceutical industry. For this reason, further incentives are being developed to further deter fraud within pharmaceuticals. Continue reading ›

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The federal government has elected to intervene in a False Claims Act against the Mayo Clinic. Over the course of ten years, Mayo allegedly filed false claims to Medicare and Medicaid for surgical pathology services that were never performed. The Clinic is also accused of failing to comply with federal regulations requiring that medical laboratories retain pathology slides for ten years. The Department of Justice, however, is only joining for the former claim, involving tests never performed.

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The Department of Justice (DOJ) has settled a False Claims Act case against Minnesota based Center for Diagnostic Imaging which accused the company of Medicare fraud.  The radiologic imaging company has agreed to pay the U.S. government $1.2 million to settle part of the allegations in the lawsuit that related to Medicare billing procedures.  The DOJ alleged that the company “upcoded” the procedures it billed to Medicare, billing procedures as if they were different, more expensive procedures. Continue reading ›

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The Department of Justice (DOJ) is seeking to intervene in a qui tam lawsuit against St. Jude Medical Inc., a manufacturer of pacemakers and other heart devices.  The DOJ initially began its investigation in 2005, and this past December decided not to intervene in the case.  However, after talking to more witnesses and uncovering more documents, the DOJ now says it has “good cause” to intervene, according to a federal district court document filed in Boston on August 5th. Continue reading ›

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A qui tam action under the False Claims Act brought in South Carolina would not be particularly interesting except for one small fact: the case is actually going to trial.  In fact, the case is going to trial for the second time, after a jury found that Tuomey Healthcare System violated the Stark Law, but did not violate the False Claims Act.  The judge later decided that deposition testimony of Tuomey’s CFO should have been allowed into evidence and the case is scheduled for a retrial. Continue reading ›

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