Healthcare Fraud

A settlement has been reached to resolve False Claims Act allegations against Rialto Capital Management and Current Owner of Indiana Hospital.

The allegations arose from a lawsuit that claimed Rialto and the Kentuckiana Medical Center (KMC), a Indiana-based hospital owned by RL BB, violated the Anti-Kickback Statute (AKS), the Stark Law, and the False Claims Act by engaging in illegal financial arrangements with two doctors who referred patients to KMC.

According to the government, KMC, under the direction of Rialto, provided personal loans to two referring doctors and then repeatedly forbore from requiring repayment of those loans. Allegedly the hospital’s failure to collect on loans to key referral sources constituted a form of remuneration prohibited by both the AKS and the Stark Law.

The Anti-Kickback Statute (AKS) prohibits the provision of remuneration to induce the referral of services or items that are paid for by a federal health care program. The Stark Law restricts financial relationships that hospitals may enter into with physicians who refer patients to them. The False Claims Act prohibits the submission of claims to Medicare for items or services that are tainted by financial arrangements that violate the AKS or the Stark Law.

“When doctors refer patients for tests and medical procedures, they must do so based on their own professional judgment and the medical needs of their patients, not personal financial benefits,” said Assistant Attorney General Jody Hunt for the Department of Justice’s Civil Division. “Illegal financial arrangements between health care providers undermine the integrity of our health care system, and we will continue to pursue those who engage in such conduct.”

The whistleblower, Dr. Abdul Buridi will receive $612,000 from the settlement.

A settlement has been reached to resolve False Claims Act allegations against Skyline Urology.

The allegations arose from a lawsuit that claimed Skyline Urology submitted improper claims to the Medicare program for evaluation and management services.

According to the government, between 2013 and 2016, Skyline Urology allegedly submitted false claims to Medicare for services that were not allowed under the Medicare program and improperly bundled services that would not have been separately billable.

“Physicians and practice groups are expected to bill Medicare properly for the services they provide,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division.  “This settlement sends a clear message that the Department of Justice will hold healthcare providers accountable if they knowingly overbill federal healthcare programs.”

“Providers are expected to closely follow Medicare rules and bill properly — nothing more, nothing less,” said Maureen R. Dixon, Special Agent in Charge of the Office of Inspector General of the U.S. Department of Health and Human Services.  “Taxpayer money wasted is money stolen from this vital federal health program.”

Reportedly, Skyline Urology has also entered into an Integrity Agreement with the U.S. Department of Health and Human Services, Office of Inspector General that will require regular monitoring of its billing practices for three years.

The Whistleblowers, James M. Cesare, the founder of the consulting firm Bay Area Healthcare Advisors LLC, will receive approximately $323,750.

A settlement has been reached to resolve False Claims Act allegations against MedStar Health.

The allegations arose from a lawsuit that claimed MedStar Health Inc, MedStar Union Memorial Hospital, and MedStar Franklin Square Medical Center paid illegal kickbacks to a cardiology group in exchange for patient referrals.

According to the government, between 2006 and 2011, MedStar paid MidAtlantic Cardiovascular Associates (MACVA) kickbacks under the guise of professional services contracts for its referrals to MedStar Union Memorial of lucrative cardiovascular procedures. In addition, MedStar greed to settle allegations that it received Medicare payments between 2006 and 2012 for medically unnecessary stents performed by John Wang, M.D., a one-time employee of MACVA who was later employed by MedStar.

“Kickbacks made in connection with the provision of medical services undermine the integrity of our health care system,” said Assistant Attorney General Jody Hunt for the Department of Justice’s Civil Division. “We will take action against medical service providers who through unlawful conduct put their own financial interests ahead of the best interests of patients.”

“Patients rightly expect their doctors will make recommendations based on sound medical practice – not payoffs that too often result in needless and sometimes even harmful procedures,” said Maureen R. Dixon, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services.  “We will continue to protect patients and taxpayer-funded government health programs from these unnecessary services, as the government contended in this case.”

The Whistleblowers, will receive a portion of the federal share of the recovery.

A settlement has been reached to resolve False Claims Act allegations against Jazz Pharmaceuticals plc (Jazz), Lundbeck LLC (Lundbeck), and Alexion Pharmaceuticals Inc (Alexion).

The allegations arose from a lawsuit that claimed Jazz, Lundbeck, and Alexion violated the False Claims Act by illegally paying the Medicare or Civilian Health and Medical Program (ChampVA) copays for their own products, through purportedly independent foundations that the companies used as mere conduits. The federal anti-kickback statutes prevent pharmaceutical companies from directly or indirectly paying for co-pays for medications covered by Medicare Part B or Part D or ChampVA.

According to the government in 2011, Jazz worked with a foundation to develop a company-supported fund to cover copays for those drugs offered through the government programs. At the same time, Jazz increased the price of Xyrem at over 24 times the rate of overall inflation in the United States, the government said. Jazz, which sells narcolepsy drug Xyrem and chronic pain treatment Prialt, has agreed to pay $57 million to resolve the allegations against the company.

According to the government in 2011 till 2016, Lundbeck raised the price of Xenazine at over 22 times the rate of overall inflation in the United States. Lundbeck, which Xenaxine, a treatment for chorea associated with Huntington’s disease, has agreed to pay the government $52.6 million to settle the claims.

Reportedly, Alexion markets Soliris, which has a list price of about $500,000 per year. Due to the high cost of the medication, the company established a fund to support the patients with co-pays. The Department of Justice said the company remained diligent to notify the foundation to cease co-pay support if a patient switched from Soliris to another medication. Alexion agreed to pay the government $13 million to resolve the allegations against it.

“These settlements demonstrate the FBI’s commitment to safeguard the Medicare program and ensure that patients receive treatment solely based on their medical needs,” said Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division. “Not only did these companies undermine a program that was set up to assist patients in decreasing the cost of their drugs, but they threatened the financial integrity of the Medicare program to which we all contribute and on which we all depend.”

“Kickback schemes undermine the integrity our nation’s healthcare system, including healthcare benefits administered by the U.S. Department of Veterans Affairs,” said Special Agent-in-Charge Sean Smith, VA Office of Inspector General, Northeast Field Office. “The VA Office of Inspector General, along with our law enforcement partners, will continue to aggressively pursue these investigations and exhaust all efforts to uncover these schemes.”

Jazz and Lundbeck entered five-year corporate integrity agreements as part of the settlement agreements.

A settlement has been reached to resolve False Claims Act allegations against Pathology Laboratory.

The allegations arose from a lawsuit that claimed Pathology Laboratory violated the False Claims Act by engaging in improper financial relationships with referring physicians.

According to the government, allegedly the company violated the Anti-Kickback Statute and the Stark Law by providing to referring physicians subsidies for electronic health records (EHR) systems and free or discounted technology consulting services.  The Anti-Kickback Statute and the Stark Law restrict the financial relationships that health care providers, including laboratories, may have with doctors who refer patients to them.  Although regulations adopted by the Department of Health and Human Services (HHS) in 2006 included provisions that allowed laboratories to provide EHR donations to physicians under certain conditions, the United States alleged that the defendant violated those conditions.  HHS withdrew those exemptions for laboratories in 2013.

“The Department of Justice has longstanding concerns about improper financial relationships between health care providers and their referral sources because those relationships can alter a physician’s judgment about the patient’s true health care needs and drive up health care costs for everybody,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division.  “In addition to yielding a substantial recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable.”

The whistleblowers’ share of the settlement has not yet been determined.

A settlement has been reached to resolve False Claims Act allegations against Avanti Hospitals LLC.

The allegations arose from a lawsuit that claimed Avanti Hospitals LLC (Avanti) and six of its owners submitted or caused Avanti’s subsidiary, Memorial Hospital of Gardena (Gardena Hospital), to submit false claims to the Medicare and Medicaid programs for medical services referred by a physician who received kickbacks and other improper payments from Gardena and other Avanti affiliates.

According to the government, allegedly, the payments from Avanti, Gardena Hospital and at least two other Avanti affiliates to a high-referring physician violated the Anti-Kickback Statute and the Physician Self-Referral Law.  Reportedly, Avanti, Gardena Hospital and at least two other Avanti affiliates provided compensation to a physician they engaged as a medical director that (1) exceeded fair market value for his services, and (2) was an attempt to incentivize him to refer patients to Gardena Hospital.  

“Illegal kickbacks paid to doctors for referrals burden our healthcare system, drive up insurance costs for everyone, and corrupt the doctor-patient relationship,” said United States Attorney Nick Hanna for the Central District of California. “Patients are not commodities who can be sold to the highest bidder, especially when the bills are ultimately being paid by American taxpayers.”

The whistleblower, Dr. Joshua Luke, the former C.E.O. of Gardena Hospital will receive approximately $1.6 million from the federal government.

A settlement has been reached to resolve False Claims Act allegations against Sutter Health LLC and an affiliated entity, Palo Alto Medical Foundation.

The allegations arose from a lawsuit that claimed Sutter Health LLC and Palo Alto Medical Foundation submitted inaccurate information about the health status of beneficiaries enrolled in Medicare Advantage Plans.

According to the government, allegedly Sutter and the Palo Alto Medical submitted inaccurate codes that inflated the risk scores of patients on the Medicare Advantage program, and enabled Sutter to reap greater reimbursements from the Centers for Medicare and Medicaid Services, which oversees the Medicare program. In addition, allegedly when the Palo Alto Medical Foundation became aware of these inaccurate diagnosis codes, it failed to identify and delete additional potentially inaccurate codes that would result in a higher payment to Sutter.

“This intervention illustrates our commitment to protecting the integrity of the Medicare Advantage program,” said U.S. Attorney Alex G. Tse for the Northern District of California.  “The share of Medicare beneficiaries enrolled in Medicare Advantage has steadily grown over the past decade, with 19 million beneficiaries enrolled in 2017.  It is critically important that the data submitted to the Medicare Advantage program is truthful, because the government relies on this information to set payment levels.  We will continue to guard government health programs from companies that improperly maximize their bottom line at taxpayer expense.”

The Whistleblower, Kathleen Ormsby, a former employee of Palo Alto Medical Foundation, will receive a share of any recovery.

A settlement has been reached to resolve False Claims Act allegations against Actelion Pharmaceuticals US Inc.

The allegations arose from a lawsuit that claimed Actelion Pharmaceuticals US Inc (Actelion) illegally paid the copays of thousands of Medicare patients who used the drug maker's hypertension drugs.

According to the government, Actelion used Caring Voice Coalition Inc, a tax-exempt patient financial assistance charity as an illegal conduit to pay the copays for a number of expensive pulmonary arterial hypertension drugs, including Tracleer, Ventavis, Veletri, and Opsumit. The illegal copays induce Medicare patients to buy the drugs that would be otherwise unaffordable.

Under the Anti-Kickback Statute, a pharmaceutical company is prohibited from offering or paying, directly or indirectly, any remuneration—which includes money or any other thing of value— to induce Medicare patients to purchase the company’s drugs.  This prohibition extends to the payment of patients’ copay obligations.

“Kickback schemes can undermine our healthcare system, compromise medical decisions, and waste taxpayer dollars,” said Phillip Coyne, Special Agent in Charge, Office of the Inspector General of the Department of Health and Human Service’s Boston Regional Office.  “We will continue to hold pharmaceutical companies accountable for subverting the charitable donation process in order to circumvent safeguards designed to protect the integrity of the Medicare program.”

Based in South San Francisco, California, Actelion Pharmaceuticals US Inc engages in the development and commercialization of pharmaceutical treatments to serve medical needs.

A settlement has been reached to resolve False Claims Act allegations against Vascular Access Centers L.P.

The allegations arose from a lawsuit that claimed Vascular Access Centers L.P. along with its 23 subsidiary and related corporations (collectively “VAC”), violated the False Claims Act by billing Medicare for non-reimbursable vascular access procedures performed on End Stage Renal Disease (ESRD) beneficiaries and engaging in an alleged kickback scheme related to referrals for such procedures.

According to the government, VAC billed Medicare for vascular access surgical procedures performed on ESRD beneficiaries, including fistulagrams and percutaneous transluminal angioplasties, without all of the required medical documentation supporting the necessity of the procedures. Furthermore, allegedly VAC submitted false claims to Medicare for services that resulted from referrals that VAC had induced through improper remuneration to physician investors and medical directors, in violation of the Anti-Kickback Statute. 

“Medicare patients with End Stage Renal Disease, like other beneficiaries, are entitled to receive care in accordance with their clinical needs and not based on the financial interests of healthcare providers,” said Assistant Attorney General Joseph H. Hunt for the Department of Justice’s Civil Division.  “Entities and individuals that attempt to profit through improper financial incentives and thereby bypass independent clinical decision-making will be held accountable.”

Reportedly, VAC has agreed to pay a minimum of $3.825 million in a series of fixed payments over five years, and could pay up to a maximum of $18,360,794, if certain contingencies are triggered.

Based in Pittsburgh, Pennsylvania, Vascular Access Centers L.P. provides dialysis access maintenance services in the United States.

The whistleblowers will collectively receive at least $612,000 as their share of the settlement. 

A settlement has been reached to resolve False Claims Act allegations against Kalispell Regional Healthcare System.

The allegations arose from a lawsuit that claimed Kalispell Regional Healthcare System (KRH) and six subsidiaries, violated the False Claims Act by paying physicians more than fair market value, and by conspiring to enter into arrangements that improperly induced referrals.

According to the government, allegedly between 2010 and 2018, KRH paid excessive full-time compensation to more than 60 physician specialists many of whom worked far less than full-time as a means of securing referrals.

Also, six KRH subsidiaries, HealthCenter Northwest LLC, Flathead Physicians Group LLC, Northwest Horizons LLC, Northwest Orthopedics & Sports Medicine LLC, and Applied Health Services Inc conspired to pay physicians employed at Kalispell Regional Medical Center to induce referrals to HealthCenter and conspired to charge below fair market value for administrative services provided to HealthCenter, which profited the physician investors at Flathead, who had an ownership stake in HealthCenter.

“Financial arrangements that improperly compensate physicians who make referrals to a hospital drive up the cost of health care services for everyone,” said Assistant Attorney General Joseph H. Hunt for the Department of Justice’s Civil Division.  “This settlement demonstrates the Department’s determination to enforce federal laws aimed at preventing conflicts of interest between the financial interests of hospitals and physicians and the best interests of the patients they serve.”

The whistleblower, Jon Mohatt, the former CFO of the system's physician network, will receive $5.4 million as his share of the recovery.