The Qui Tam Blog – Qui Tam Attorneys

On Wednesday, March 20, 2013, the Department of Justice announced a $12 million dollar settlement with Hospice of Arizona L.C., American Hospice Management LLC and their parent corporation, American Hospice Management Holdings LLC to resolve allegations that they falsely and fraudulently submitted claims to the Medicare program for ineligible hospice services in violation of the federal False Claims Act (Act).

Hospice care is intended for patients who have a life expectancy of six months or less as a result of a terminal illness.  Patients admitted to hospice care no longer receive treatment to cure their illness, rather they receive care that focuses on the relief of the pain and stress of their disease. Medicare will cover the costs of such care for its beneficiaries if the patient’s disease has run its normal cost and the patient is expected to live for six months or less.

The federal government through the qui tam case U.S. ex rel. Momeyer v. Hospice of Arizona, L.C. et al. No. 1:10-cv-280 (D. Md.) alleged that between April 1, 2002 and December 31, 2010,  Hospice Care of Arizona L.C. and the two related companies submitted claims to Medicare for reimbursement related to the care given to patients who did not need hospice services and billed at a higher reimbursement rate than it was allowed.

The government alleged that Hospice Care of Arizona L.C. and the two related companies pressured the staff to find Medicare eligible patients for admission, that they adopted policies that delayed and discouraged staff from discharging patients who no longer needed hospice care and that they did not have an adequate compliance program to address such issues.  American Hospice Management Holdings, L.L.C. has entered into a corporate integrity agreement with the Inspector General of the Department of Health and Human Service that will require the company to establish policies and procedures to avoid and detect similar conduct that is the basis of this settlement.

The whistleblower in this case, Ellen Momeyer, a former Hospice of Arizona L.C. employee, will receive under the provisions of the Act $1.8 million of the government’s recovery for bringing this fraud to its attention.

Grace Healthcare LLC and its affiliate Grace Ancillary Service LLC (collectively referred to as Grace) located in Chattanooga, Tennessee agreed to pay $2.7 million to resolve allegations that the companies violated the False Claims Act by knowingly submitting or causing to be submitted false claims for medically unreasonable and unnecessary rehabilitation therapy to the federal Medicare program and the state TennCare/Medicaid program.  The therapy services included physical, occupational, and speech therapy.

The settlement resolves the qui tam action brought under the False Claims Act by a former Grace employee that alleged that in ten nursing homes between 2007 through June 2011 Grace pressured therapists to increase the amount of therapy they provided to residents regardless of the medical necessity of such services in order to meet targets for Medicare revenue.  These targets were established without regard to the patients’ actual need for therapy and could only be achieved by billing for a large amount of therapy for each patient.  Grace Ancillary Service LLC provided the therapy in some of the skilled nursing facilities owned and/or managed by Grace Healthcare LLC in Tennessee and elsewhere.

The whistleblower will receive $405,000 of the government’s recovery in accordance with the False Claims Act provisions.

Corning Incorporated, (Corning) headquartered in the State of New York, has settled False Claims Act allegations that through its Corning Life Science division it submitted false claims to the United States for reimbursement of laboratory research products sold to various federal agencies.  The false claims relate to a contract Corning Incorporated entered into in 2005 to sell laboratory research products to federal government entities through the General Services Administration’s Multiple Award Schedule program.  Under the Multiple Award Schedule program, a company enters a contract with the General Services Administration (GSA) and in exchange for gaining access to the government marketplace and the hundreds of government purchasers, a company agrees to disclose its commercial pricing policies and practices and abide by the contract terms.

The settlement resolves a qui tam lawsuit filed by whistleblower Kevin Jones under the False Claims Act provisions.  Mr. Jones was a former Corning Life Science sales representative.  The settlement resolves allegations that Corning did not disclose its commercial pricing policies and practices during contract negotiations with GSA and during the course of the contract’s administration.  Specifically, Corning knowingly failed to provide GSA with current, accurate and complete information regarding its commercial sales practices, including discounts offered to other commercial customers and that Corning knowingly made false statements regarding its sales practices and discounts.  Additionally, allegations were settled that Corning knowingly failed to comply with the price reduction clause of the GSA contract by not disclosing those discounts and that the discounts were actually higher than what Corning had disclosed to GSA.   Corning also failed to pass those discounts onto its government customers.  The United States government alleged that because of Corning’s actions, it received lower discounts and paid far more than it should have for Corning’s products.

For his role as a whistleblower, Mr. Jones will receive $904,000 of the government’s recovery under the provisions of the False Claims Act.

The Williston Rescue Squad Inc., (Williston Rescue)  located in Williston, South Carolina recently settled allegations under a False Claims qui tam action that it provided medically unnecessary ambulance transports to Medicare beneficiaries.  Under Medicare regulations ambulance companies are only reimbursed for non-emergency transportation services if the patient is confined to bed or has a medical condition such that any other form of transportation, such as a van, would endanger the patient’s health.

Sandra McKee filed the qui tam action under the provisions of the False Claims Act.  McKee is a clinical social worker at a health care facility that routinely works with patients transported by Williston Rescue.  The $800,000 settlement resolved the allegations that Williston Rescue submitted claims for reimbursement to Medicare for routine, non-emergency transportation services that were not medically necessary and that the company created false documents to make the transports appear to meet the Medicare requirements for such services.

McKee will recieve $160,000 as her share of the recovery under the False Claims Act’s provision for bringing this fraud to the government’s attention.

The United States government entered a $109 million settlement with Sanofi-Aventis U.S. Inc. and Sanofi-Aventis U.S. LLC (Sanofi US), subsidiaries of the international drug manufacturer Sanofi that resolved allegations that Sanofi US violated the False Claims Act by providing kickbacks to physicians to induce them to prescribe Sanofi US’s drug Hyalgan and by providing false average sales price (ASP) reports that were used by government health care programs to set reimbursement rates for Hyalgan, and which resulted in those government programs paying inflated prices for the drug.

The United States alleged that Sanofi US provided it sales force with thousands of free samples of Hyalgan to give to doctors.  Hyalgan is a treatment for osteoarthritis which is injected directly into the knee joint. Sanofi allegedly trained its sales representatives to market the “value add” of the free samples to the physicians which translated in practice to giving the doctors free samples and promises of negotiated lower pricing on Hyalgan in exchange for increased prescriptions from each physician.

In the Department of Justice’s announcement on December 19, 2012, the government provided examples of the alleged kickbacks such as a Southern California based sales representative who allegedly gave a doctor twenty-five free samples for every 100 units purchased.  This sales representative sweetened the deal by regularly treating the entire practice to lavish dinners approved and paid for by Sanofi.  A Central Texas-based Sanofi US representative allegedly promised a physician 125 free Hyalgan syringes in exchange for a purchase of 500 Hyalgan units and received praise from Sanofi for ‘utilizing samples to provide value for the office.’

The government health care programs such as Medicare provide the same reimbursement rate for Hyalgan and its direct competitor.  By lowering the prices of Hyalgan in exchange for increased prescriptions, Sanofi US also offered the physicians a greater “spread” or profit margin with the lower prices as the government reimbursement remained the same fixed rate.  Sanofi US also manipulated the ASP reimbursement rates because the company did not take into account the free drugs as a discount when reporting the price paid for the drug.  Thus Sanofi continued to receive a higher reimbursement rate as well.

Because of Sanofi’s actions the government alleged that Medicare and other federal health care programs paid millions of dollars in kickback-tainted claims for Hyalgan. The settlement of this case also resolved the pending qui tam lawsuit filed by Mark Giddarie under the False Claims Act.  By blowing the whistle on Sanofi’s alleged fraudulent behavior and under the provisions of the False Claims Act, Giddarie will receive $18.5 million from the government’s recovery.

Morton Plant Mease Health Care Inc. and its affiliated Florida hospitals have agreed to pay a little over $10.1 million to the United States government for submitting fraudulent health care claims for services provided to Medicare beneficiaries.

The settlement announced by the Department of Justice on November 20, 2012, resolves allegations that the Morton Plant Mease Health Care Inc.’s affiliated hospitals improperly billed for services between July 1, 2006 and July 31, 2008.  The affiliated hospitals submitted bills to Medicare that charged for certain interventional cardiac and vascular procedures as inpatient care when those services should have been properly charged at less costly outpatient care or as observational status.

The fraudulent activity was brought to the United States government’s attention through a qui tam lawsuit filed by Randi Ferrare. Ms. Ferrare was a former director of Health Management Services at Morton Plant Hospital, one of the several affiliated hospitals of Morton Plant Mease Health Care Inc.  For bringing the whistle blower action, Ms. Ferrare will receive $1.8 million as provided in accordance with the False Claims Act.

The Department of Justice announced today, Friday, November 2, 2012, that it entered a settlement with Orthofix International NV  (Orthofix) to settle allegations that its subsidiary, Blackstone Medical Inc., paid kickbacks to spinal surgeons to induce them to use the company’s spinal surgery products.  Blackstone Medical, Inc. is headquartered in Springfield, Massachusetts.  Orthofix is headquartered in Curacao, with its North American headquarters located in McKinney, Texas.  Through its subsidiaries, Orthofix manufactures and sells spinal implants and other spinal surgery products.

Blackstone Medical Inc., through its sales representatives, offered spinal surgeons a variety of kickbacks to convince them to purchase the company’s products.  The government’s complaint alleged that the doctors did not always use these products but always billed Medicare, Medicaid, TRICARE and other government health programs for such use.  The kickbacks included entering sham consulting agreements, wherein the surgeons received payments without providing any consultation services, sham royalty agreements and research grants.  The sales representatives also lavishly entertained the surgeons with dinners, travel, and entertainment.

As part of the $30 million dollar settlement, Orthofix also agreed to enter a corporate integrity agreement.  These agreements are usually five years in duration and require the company to put in place procedures, reviews and audits to avoid and/or promptly detect conduct similar to that alleged  in the settlement.

This case was brought to the government’s attention through the qui tam action filed by whistleblower Susan Hutcheson in the federal district court in Massachusetts:  United States ex rel. Hutcheson v. Blackstone Medical, Inc. et al.   As the whistleblower and under the provisions of the False Claims Act Ms. Hutcheson will receive $8 million as her share of the settlement.

The Department of Justice, on Thursday October 25, 2012, announced its settlement with Boehringer Ingelheim Pharmaceuticals Inc.(Boehringer) to resolve allegations that Boehringer improperly promoted its drugs,  Aggrenox, Atrovent, Combivent and Micardis for uses that were not medically accepted indications; promoted the sale and use of Combivent and Atrovent at doses that exceeded those covered by federal health care programs; that Boehringer made unsubstantiated claims about Aggrenox’s efficacy, and that the company paid kickbacks to health care professionals in exchange for prescribing these four named drugs.  As a result of these actions, the government alleged that false claims were submitted to government health care programs for reimbursement for these drugs.

The settlement arose from a qui tam action filed in the District of Maryland by whistle-blower Robert Heiden, a former sales representative for Boehringer. The government and states intervened in the action and settled the alleged claims for $95 million, of which the federal government will obtain $78,455,048 and the state Medicaid programs will share $16.544,952.  Under the provisions of the False Claims Act that permit the whistle-blower to receive a portion of the proceeds, Mr. Heiden will receive more than $17 million.

The Food and Drug Administration (FDA) approved Aggrenox to prevent secondary strokes.  The settlement resolves allegations that Boehringer promoted Aggrenox for certain cardiovascular events such as myocardial infarction and peripheral vascular disease, neither indication of use was approved by the FDA.  Although doctors may prescribe drugs for uses that the FDA did not approve, or for “off-label” uses, a pharmaceutical company, such as Boehringer, may not market the drugs for such ”off-label” uses.

The FDA approved Combivent to treat continued symptoms of bronchospasm in patients with COPD who already are on a bronchodilator.  The government alleged that Boehringer marketed Combivent for use prior to another bronchodilator in treating COPD.  The FDA has not approved this indication of use for Combivent.

Finally, as to the government’s off-label allegations, it was alleged that Boehringer marketed Micardis for treatment of early diabetic kidney disease.  The FDA approved Micardis to treat hypertension.

Additionally, the settlement resolves the allegations that Boehringer knowingly promoted the sale and use of Combivent and Atrovent at doses that exceeded those covered by federal health care programs.  Furthermore, Boehringer knowingly made unsubstantiated claims about Aggrenox’s efficacy, including that it was a superior drug to Plavix.  Unless a pharmaceutical company has specifically researched and performed specific FDA regulated head to head testing as between two drugs, thus, proving a drug’s superiority over another, the pharmaceutical company is not allowed to make these kind of superiority claims when marketing its drugs.

The settlement also resolves claims that Boehringer paid kickbacks to health care professionals as incentive to prescribe Aggrenox, Atrovent, Combivent and Micardis. Such payments are in violation of the federal and state Anti-Kickback Statutes. Under the recent amendments to the False Claims Act, a violation of the Anti-Kickback Statute is a violation under the False Claims Act.

The government will also enter a Corporate Integrity Agreement with Boehringer that requires the company to put in place procedures, audits and reviews of company behavior and to promptly detect conduct similar to that arising under the settlement.  The average length of such agreements is five years.

On October 15, 2012, the United States government announced a False Claims Act settlement with RxAmerica, LLC to resolve allegations that it made false submissions to the Centers for Medicare & Medicaid Services (CMS) regarding the prices it charged for drugs under its Medicare Part D plan.

In one of the first False Claims Act settlements involving Medicare’s Prescription Drug Program, more commonly referred to as Medicare Part D, the government alleged that between January 1, 2007 and December 31, 2008, RxAmerica, LLC, a wholly owned subsidiary of CVS Caremark Corporation, made false submissions to CMS regarding prices for certain generic prescription drugs CMS used for its  Plan Finder program.  CMS offers Plan Finder, a web-based tool,  to Medicare Part D beneficiaries in order to determine the estimated prescriptions drug prices for each Medicare Part D plan. The beneficiaries make their choice to join a particular Part D prescription plan based on this pricing information.  The data CMS uses for its Plan Finder is submitted by each Part D plan sponsor.  Each sponsor, including RxAmerica,  certified to CMS that it would submit accurate pricing data for Plan Finder.

The government alleged that despite RxAmerica’s certification to CMS regarding the submission of accurate pricing to Plan Finder, it actually submitted one set of prices to CMS to use with the program and submitted another set of prices for payment from Medicare Part D.  Some prices were significantly higher than the prices that RxAmerica had originally reported to Plan Finder.  RxAmerica was charged with advertising false prices to Medicare Part D enrollees.

The settlement resolves two separately filed qui tam actions.  The first complaint, U.S. ex rel. Doe v. RxAmerica was filed in the United States District Court of the Eastern District in November 2008.  The second complaint, U.S. ex rel. Hauser v. CVS Caremark Corp., and RxAmerica was filed in the United States District Court for the Western District of North Carolina in June 2009.  The two cases were consolidated in the Eastern District of New York in November 2011.

On Friday, October 19, 2012, the Department of Justice announced that the United States government was intervening in the False Claims Act case United States ex rel. John Raggio v.  Jacintoport International LLC, alleging that Jacintoport International LLC, (Jacintoport) a cargo handling and stevedoring firm headquartered in Houston, fraudulently exceeded the explicit caps set on the rates Jacintoport could charge for loading humanitarian food aid onto cargo ships.

The government’s complaint alleges that in 2007 Jacintoport entered into a warehousing and logistics contract with the U.S. Agency for International Development (USAID) for the storage and redelivery of emergency humanitarian food aid bound for crisis areas around the world.  By that contract’s terms, Jacintoport agreed to explicit caps on the rate that Jacintoport could charge for stevedoring.   In the shipping industry, stevedoring refers to the actual loading of the cargo onto ships.  The government alleges that between January 2008 and at least October 2009, Jacintoport regularly charged rates that exceeded those explicit caps, resulting in inflated rates charged to the United States for the delivery of more than 50 thousand tons of humanitarian food aid.

This qui tam action was originally brought by the whistleblower John Raggio.  Mr. Raggio allegedly received an invoice from Jacintoport that contained the excessive stevedore rates.  The claims alleged in United States’ complaint are only allegations and do not constitute a determination of liability.