Archive for the ‘Settlements’ Category

Shands Healthcare of Florida Settles $26 Million False Claims Act Allegations

Shands Teaching Hospital & Clinics Inc., Shands Jacksonville Medical Center Inc., and Shands Jacksonville Healthcare Inc. (Shands Healthcare), which operate a network of health care providers in Florida has entered an agreement with the government to settle allegations that six of the Shands Healthcare’s hospitals submitted false claims to Medicare, Medicaid and other federal health care programs for inpatient procedures that should have been billed as outpatient services.

The government alleged that the six hospitals – Shands at Jacksonville; Shands at Gainesville, Shands Alachua General Hosptial; Shands at Lakeshore; Shands Starke and Shands Live Oak – knowingly submitted inpatient claims, from 2003 through 2006, to Medicare, Medicaid and TRICARE for services and procedures the hospitals knew were supposed to be billed as outpatient services or procedures.

Terry Myers, the president of the helathcare consulting firm YPRO Corp. filed the underlying qui tam lawsuit in the federal district court in Jacksonville, Florida.  The government and Shands Healthcare settled the allegations raised in the qui tam lawsuit for $26 million of which $25,170,400 will be reimbursed to Medicare and the other federal health care programs.  The State of Florida will recieve $829,600.  Mr. Myers’ share of the settlement as a whistleblower under the Federal False Claims Act has yet to be decided.

Posted in False Claims, Federal False Claims Act, Healthcare Fraud, Qui Tam, Settlements, Whistleblower LawsuitNo Comments

Wyeth Pharmaceuticals Settles Off-label Marketing Allegations for $490.9 Million

Wyeth Pharmaceuticals Inc., (Wyeth) acquired by Pfizer Inc. in 2009, entered a $490.9 million settlement with the United States government that resolved criminal and civil liability arising from the off-label marketing of it immunosuppressive drug Rapamune.

Under the Federal Food, Drug and Cosmetic Act (FDCA), when a pharmaceutical company developes a product it must indicate the specific use of the product in its new drug approval application submitted to the U.S. Food and Drug Administration (FDA).  Once the FDA approves the product for the specific use, a company may not market the drug for any other uses, unless if recieves FDA approval for such new use. The FDA, in 1999, approved Wyeth’s Rapamune for the limited use in renal (kidney) transplant patients and required the drug’s label to include a warning against certain uses.

Under the government’s criminal information, it alleged that Wyeth trained its national Rapamune sales force to promote the drug for use with non-renal transplant patients. Or in other words to promote the use of Rapamune for uses other than its specific FDA approved use.  According to the information Wyeth also supplied its sales force with training materials regarding the off-label use of Rapamune and how to use such materials in presentations to transplant physicians.  Wyeth provided its sales force with financial incentives to target all transplant patients with the goal of increasing Rapamune sales. Sanford Coats, U.S. Attorney for the Western District of Oklahoma characterized Wyeth’s training of its sales forceon the off-label promotions of Rapamune as “a systemic, corporate effort to seek profit over safety.”

Wyeth pleaded guilty to the criminal information that charged it with a misbranding violation under the FDCA.  Wyeth was charged with a criminal fine and forfeiture of $233.5 million.  Wyeth concurrently settled civil allegations with the federal and state governments totalling $257.4 million.  The government under the civil settlement alleged that from 1998 through 2009, Wyeth promoted Rapamune for unapproved uses, some which were not medically accepted indications and, therefore, were not covered by Medicare, Medicaid and other federal health care programs.  The unapproved uses included promoting Rapamune for non-renal transplants, converting patients from other immunosuppressant drugs to Rapamune, and using Rapamune in combination with other immunosuppressive agents not included on Rapamune’s FDA approved label.  This conduct resulted in false claims being submitted to the federal and state health care programs.  Wyeth in settling these allegations will pay the federal government $230, 112, 596 and the state governments will recieve $27,287,404.

This civil settlement resovles two qui tam cases filed which included these allegations.  The first action was filed by former Rapamune sales representative Marlene Sandler, and pharmacist Scott Paris.  The second qui tam was filed by former Rapamune sales reprsentative Mark Campbell.  At the time of the Department of Justice’s announcement on July 30, 2013, the whistleblowers had not resovled the amount of their share of the total settlement.


Posted in False Claims, Federal False Claims Act, Healthcare Fraud, Off-Label Marketing, Qui Tam, Settlements, State False Claims ActsNo Comments

Fifty-five Nationwide Hospitals Settle False Claims Allegations for $34 Million

Fifty-five hospitals located in over twenty-one states entered into a settlement agreement with the United States to pay $34 million to settle allegations under the the False Claims Act for the submission of false claims to Medicare.  The DOJ announced the settlement on July 2, 2013 stating that the claims related to Medicare reimbursement for kyphoplasty procedures.

Kyphoplasty procedure is a minimally invasive procedure to treat certain spinal fractures often caused by osteoporosis.  In many cases the procedure is performed as an outpatient procedure.  Outpatient procedures are reimbursed by Medicare at a far lower rate than inpatient procedures.  These allegations, raised through a qui tam suit brought by Craig Patrick and Charles Bates, stated that the named hospital defendants often admitted patients needing the kyphoplasty procedures on an inpatient status which resulted in more costly remibursements from Medicare.  These hospitals knowingly submitted the claims for inpatient basis when the procedure should have been billed on an outpatient basis.

The July 2, 2013 settlement also resolved allegations against Medtronic Spine LLC, the corporate successor to Kyphon, Inc. that developed the medical devices to be used during the procedure and is the former employer of the two whistleblowers.  The Department of Justice alleged that the company defrauded Medicare by counseling hospital providers to preform the procedures as an inpatient rather than an outpatient status.  The company will pay the government $75 million to resolve these allegations.

The two whistleblowers will share approximately $5.5 million from the two July 2, 2013 settlements.  As of July 2, 2013 the government has reached settlements with one hundred hospitals on these allegations totally $75 million.

Posted in False Claims, Federal False Claims Act, Healthcare Fraud, Qui Tam, SettlementsNo Comments

Dubuis Health System and Southern Crescent Hospital For Specialty Care Settle False Claims Allegations for $8 Milliion

The Department of Justice on July 26, 2013 announced it had resolved, under the False Claims Act, allegations of the submission of false claims to Medicare with Dubuis Health Systems and Southern Crescent Hospital for Specialty Care, Inc. (Southern Crescent).   Dubuis Health Systems manages long-term acute care hospitals in several states.  It manages hospitals for Southern Crescent.  Southern Crescent is located in Riverdale, Georgia and is part of the CHRISTUS Health System.

Long-term acute care hospitals are certified to focus on patients with complex medical needs, whose average length of stay is more than twenty-five days.  The long-term care acute hospitals recieve higher reimbursement for the care provided than typical acute care hospitals.  The allegations against Dubuis Health Systems and Southern Crescent states that between 2003 and 2009, Dubuis Health Systems and Southern Crescent knowingly kept patients hospitalized for more days than was considered medically necessary in order to recieve higher reimbursment from Medicare and to keep Southern Crescent classified as a long-term acute care facility.

Darlene Tucker, a former administrator at Southern Crescent,  filed the whistleblower complaint under the False Claims Act that lead to this settlement.  She will recieve $2,160,000 of the United States recovery.

Posted in False Claims, Federal False Claims Act, Healthcare Fraud, Qui Tam, Settlements, Worthless ServiceNo Comments

Arizona Hospice Care Group to Pay $12 Million to Settle False Claims Act Allegations

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.

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 but, rather, 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.

Posted in False Claims, Federal False Claims Act, Healthcare Fraud, Qui Tam, Settlements, Worthless ServiceNo Comments

Tennessee Nursing Home Managers Agree to Pay $2.7 Million to Settle False Claims Act Allegations

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.

Posted in False Claims, Federal False Claims Act, Healthcare Fraud, Mens Rea, Settlements, State False Claims Acts, Whistleblower Lawsuit, Worthless ServiceNo Comments

Corning Incorporated Settles False Claims Act Allegations for $5.65 Million

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.

Posted in False Claims, Federal False Claims Act, Government Intervention, Healthcare Fraud, Mens Rea, Qui Tam, Settlements, Whistleblower LawsuitNo Comments

South Carolina Ambulance Company Settles False Claims Allegations for $800,000

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

Posted in Case Studies, False Claims, Healthcare Fraud, Qui Tam, SettlementsNo Comments

Government Resolves False Claims Act Allegations with Sanofi for $109 Million

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.

Posted in Anti-Kickback Statute, Best Price, False Claims, Federal False Claims Act, Healthcare Fraud, Qui Tam, SettlementsNo Comments

Morton Plant Mease Health Care Inc. settles $10.1 Million False Claims Allegations with United States Government

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.

Posted in False Claims, Federal False Claims Act, Healthcare Fraud, Qui Tam, Settlements, Upcoding, Whistleblower LawsuitNo Comments

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