The Qui Tam Blog

Earlier this week AtriCure, Inc. executed a settlement with the Department of Justice in a case brought to court by a relator in 2007. AtriCure, primarily a manufacturer of cardiac surgical ablation systems, settled with the Department of Health and Human services for $3.8 million plus interest covering a five year period.

The case was filed in the United States District Court for the Southern District of Texas and charges AtriCure in violation of the Federal False Claims Act. By using illegal kickbacks and sponsoring non-branded marketing, AtriCure coaxed medical practices into favoring the corporation’s costly in-patient cardiac surgical ablation procedure over a clinically more effective out-patient catheter process.

Compensation for the costs incurred to Medicare because of the more costly treatment being falsely preferred are being sought by the relator and the Department of Justice on behalf of the Department of Health and Human Services.

In a press release earlier this week, the Department of Justice stated that this case is part of a larger movement to fight healthcare fraud. In the last year alone, the legal jurisdiction granted by the False Claims Act has been used by the US Government to recover approximately $2.2 billion in cases of fraud towards United States health care programs.

Last Wednesday, the Justice Department held a conference to announce Pfizer’s off-label criminal and civil settlement for its fraudulent marketing practices.

Pfizer’s subsidiaries will plead guilty to a felony violation of the Food, Drug and Cosmetic Act for misbranding with the intent to defraud or mislead. It will pay a criminal fine of $1.195 billion and forfeit $105 million, bringing the total criminal settlement to $1.3 billion.

The civil settlement of $1 billion will resolve claims under the False Claims Act that Pfizer illegally promoted four of drugs (most notably the anti-inflammatory drug Bextra), caused false claims to be submitted to government healthcare programs for indications other than those approved by the FDA, and provided kickbacks to doctors to induce them to prescribe these drugs.

Pfizer has also entered into a Corporate Integrity Agreement with the Office of Inspector General of the Department of Health and Human Services that will subject the company’s marketing practices to additional review procedures and safeguards to help avoid and promptly detect similarly offending conduct. For example, Pfizer’s executives will need to complete annual compliance certifications and the company will be required to make detailed disclosures on its website. 

The settlement is notable enough for its sheer magnitude: it is the largest in the Department of Justice’s history; it also represents the largest criminal fine imposed ever in the United States for any matter.

But the story behind the story is also interesting. The settlement itself was already announced–and largely completed–by the Bush administration. But whereas the Bush administration was less likely to tout its strikes against big pharmaceutical companies, the Obama administration is happy to take the credit. This certainly signals a bleak future for the drug companies. The administration appears poised to go after these cases with more gusto, especially as it faces criticism for the high cost of Obama’s healthcare proposals.

In January, Eli Lilly and Company settled similar claims over its marketing of Zyprexa for $800 million. The success of that case can be traced directly to courageous stands taken by employee whistleblowers. 

The six whistleblowers in the Pfizer case will share some $102 million of the federal portion of the civil recovery. As employee whistleblowers continue to work with the current administration, we can expect to see more of these announcements in the coming months.

Are you a victim of Medicare fraud?  If you’re deciding whether to report potential fraud with a Medicare fraud attorney, use the list of situations below to help guide your decision. Each of the three scenarios listed below is an example of a fraudulent Medicare charge.

It is important to always review your medical bill. This is how you will become aware of potentially fraudulent Medicare charges. If anything on your bill seems suspicious, don’t hesitate to look into it further.

1. Your Medical Bill Includes Services Which Were Not Performed
As you review your bill, you may become aware of items which were billed but not performed. If you don’t remember a listed procedure, test or service being performed, get more information immediately. Fraudulent charges occur when a medical firm hopes to slip extra charges into your bill without anyone noticing. It is important to check your bill for extra services so this fraud can be caught.

2. Your Medical Bill Includes Services Which Were Deficient Or Worthless
If you were charged for services that did not render the appropriate treatment, you may want to consider contacting a Medicare fraud attorney. If tests, procedures or medical services were not performed to medical industry standards, or if the service in question was deficient in some way, the medical firm billing for the service should not include this service on the bill. Watch your bill to make sure deficient or worthless items to not appear.

3. Your Medical Bill Includes Fees For Services Which Were Not Necessary
Did you receive treatment or tests that were not necessary? Some medical firms perform unnecessary services so they can bill them. This is a dehumanizing way for a medical office to make an extra buck, and is a good reason to discuss your potential case with a Medicare fraud attorney.

By: Joel Androphy, Rachel Grier, and Stephanie Gutheinz 

In order to be successful, a relator must establish that a fraudulent statement or record was material to the government’s decision to pay a false claim.  For claims reimbursed under a diagnosis related group (“DRG”) code system, only identifying line items on a patient’s bill may fall short of this materiality requirement.  Reimbursement under the DRG system provides a fixed payment based on the patient’s DRG, which is calculated based on the patient’s diagnosis and age.  In most circumstances, the DRG rate satisfies full payment for all services provided, including prescription drugs.  Thus, under the DRG system, individual prescriptions are immaterial to the amount the government pays for the treatment of a given patient because payment is based solely on the DRG rather than any individual charges on the patient’s bill.  As such, those line item charges cannot serve as the basis for FCA liability under these circumstances.  The case is United States ex rel. Kennedy v. Aventis Pharmaceuticals, Inc., a court in the Northern District of Illinois.

By: Joel Androphy, Rachel Grier, and Scott Braden

Medicaid can only reimburse drugs that are used for a medically accepted indication, meaning an indication that is either approved by the FDA or supported by one of three drug compendia. In Rost, the whistleblower, a former Pfizer marketing executive, brought a qui tam suit alleging that Pfizer unlawfully promoted the off-label use of Genotropin (human growth hormone) for treatment of short stature in children. Pfizer argued that one of the compendia, DRUGDEX, cited Genotropin as “possibly effective” for short stature in children.  Citing to a recent statement by the Center for Medicaid and State Operations, the court pointed out that to be reimbursable, an off-label use must be supported by the compendia as opposed to merely listed.  It was unclear from the record whether being cited by DRUGDEX as “possibly effective” could be read to “support” an off-label use. 

The court stated that Pfizer’s stronger argument was that the off-label claims were not false because they were approved by Indiana Drug Utilization Review (“DUR”) Board.  For example, if a state knowingly reimburses for the off-label use of a drug “after a prior authorization review,” the government knowledge could “negate the intent requirement under the FCA.”  This argument, however, was trumped by the allegations (and potential proof) that the false qui tam claims were caused by unlawful kickbacks.

A federal judge in Brooklyn rejected a pharmaceutical sales representative’s defense of commercial free speech in responding to charges of criminal misbranding.   The Court found that the prohibition of off-label promotion of drugs is essential to maintaining the integrity of the FDA’s drug approval process,  The government used informants in investigating the case.   The case is United States v. Caronia, a court in Brooklyn, the Eastern District of N.Y.

In a whistleblower case, a Magistrate Judge, following the law from the Eleventh Federal Circuit Court of Appeals, decided that in order for a whistleblower to properly plead a qui tam case, he must plead with particularity the actual submission of false or fraudulent claims to the government. In other words, it was not enough for the whistleblower to allege that there were illegal off-label marketing campaigns causing the submission of hundreds of thousands of false claims for prescriptions. The whistleblower was also required to include specific allegations of an actual false claim that was submitted to the government. The obvious inference was insufficient. The message from the 11th Circuit Court is simple. If you are going to prevail in our circuit, you must be prepared to have as clients or witnesses everyone in the chain of alleged misconduct, especially people in the billing department to prove that the time and effort devoted toward a scheme culminated in an actual billing. The message is clear.  Do not file off-label marketing cases in this federal circuit, or for that matter any other claims that require specific billing information.  The case is USA ex rel. Hopper v. Solvay Pharmaceuticals, a court in the Middle District of Florida (Tampa).

The Healthcare Fraud - Upcoding section of this blog is currently being developed.  For more information, visit the Qui Tam section of the Berg & Androphy web site.

The Healthcare Fraud - Unbundling section of this blog is currently being developed.  For more information, visit the Qui Tam section of the Berg & Androphy web site.

The Healthcare Fraud - Worthless Service section of this blog is currently being developed.  For more information, visit the Qui Tam section of the Berg & Androphy web site.