Healthcare Fraud

A settlement has been reached to resolve False Claims Act allegations against Orthopaedic and Neuro Imaging LLC and its owner Richard Pfarr.

The allegations arose from a lawsuit that claimed Orthopaedic and Neuro Imaging LLC and its owner, Richard Pfarr submitted false claims for Medicare reimbursement.

According to the government, allegedly Orthopaedic and Neuro Imaging LLC and Richard Pfarr administered contrast dye during MRI scans on patients without proper supervision by a physician. Contrast dye is a chemical that is injected intravenously into the body to make certain tissues easier to see.

“The FBI, along with our partners, will work aggressively to combat healthcare fraud utilizing all tools available to the agencies charged with rooting out fraud,” said Special Agent in Charge Gordon B. Johnson of the FBI’s Baltimore Division.   “We will continue to work tirelessly to prevent these programs from becoming targets and fight fraud wherever we find it. Medical Providers who take shortcuts to enrich themselves in delivering patient care will be held accountable.”

Reportedly, Orthopaedic and Neuro Imaging LLC will pay $16,223,091.38 and Richard Pfarr, is jointly and severally liable for $6,125,947.13.

The lawsuit was originally filed by Whistleblower, Robin White, a former employee of Orthopaedic and Neuro Imaging LLC who will receive an 18-percent share of the recovery.

A settlement has been reached to resolve False Claims Act allegations against Kool Smiles clinics.

The allegations arose from lawsuits that claimed dental management company Benevis LLC and more than 130 of its affiliated Kool Smiles dental clinics knowingly submitted false claims for payment to state Medicaid programs for medically unnecessary dental services performed on children insured by Medicaid.      

According to the government, allegedly between January 2009 and December 2011, Kool Smiles clinics knowingly submitted false claims for unnecessary baby root canals, tooth extractions and stainless steel crowns.

Allegedly, Kool Smiles clinics routinely pressured and incentivized dentists to meet production goals through a system that disciplined “unproductive” dentists and awarded “productive” dentists with substantial cash bonuses based on the revenue generated by the procedures they performed. According to the settlement agreement, complaints from Kool Smiles’ own dentists about the medically unnecessary procedures were ignored.

 “The allegations in these cases are particularly egregious because they involved medically unnecessary dental services performed on children,” said U.S. Attorney John H. Durham for the District of Connecticut.  “Exploiting needy children for financial gain is inexcusable.  The U.S. Attorney’s Office in Connecticut is committed to aggressively pursuing health care providers that submit fraudulent claims to government health care programs.”

Reportedly, of the $23.9 million to be paid by Benevis and its affiliated Kool Smiles clinics, the federal government will receive a total of $14,244,073.49, plus interest, and a total of $9,655,926.51, plus interest, will be returned to individual states, which jointly funded improper claims submitted to state Medicaid programs.

"The companies strongly disagree with the government's allegations," Benevis and Kool Smiles said in a statement that pointed out that the settlement is not related to quality of dental care.

Three whistleblowers, former Kool Smiles employees, will get more than $2.4 million as part of the settlement.

A settlement has been reached to resolve False Claims Act allegations against EmCare Inc and Physician’s Alliance Ltd.

The allegations arose from a lawsuit that claimed EmCare Inc and Physician’s Alliance Ltd (PAL) received illegal remuneration in exchange for patient referrals to hospitals owned by the now-defunct Health Management Associates (HMA).

According to the government, allegedly from 2008 to 2012, HMA made bonus payments to EmCare doctors and tied EmCare’s contracts for staffing its hospitals to increasing admissions to HMA facilities of patients covered by Medicare. Under the settlement, EmCare will pay $29.6 million to resolve allegations.

Also, according to the government, allegedly Physicians’ Alliance and three of its executives from 2009 to 2012 also accepted payments in return for referring patients to two HMA hospitals. Under the settlement, PAL and its executives will pay $4 million plus a percentage of proceeds from the sale of PAL’s interest in a joint venture with HMA.

“These settlements demonstrate our commitment to ensuring that physician judgment is not compromised by illegal inducements,” said Acting Assistant Attorney General for the Justice Department’s Civil Division, Chad A. Readler.  “Patient care decisions should be based on the needs of patients rather than the financial interests of physicians.”

The whistleblowers, Dr. Thomas Mason and Dr. Stephen Folstad, whose medical practice previously supplied doctors to staff HMA hospital emergency departments, will receive $6.2 million under the EmCare settlement.

In a separate action, former HMA hospital executives, George E. Miller and Michael J. Metts, filed suit alleging the scheme between PAL and HMA.  Their share of the settlement has not yet been determined.

A settlement has been reached to resolve False Claims Act allegations against 21st Century Oncology Inc.

Allegedly, 21st Century Oncology Inc and certain of its subsidiaries and affiliates agreed to pay $26 million to the US government after disclosing that it had falsely attested to its providers' use of electronic health records in order to obtain financial incentives under the meaningful use program. 

Reportedly, the settlement also resolved claims that the company and its subsidiaries had violated the False Claims Act by submitting claims for services they had provided "pursuant to referrals from physicians with whom they had improper financial relationships."

“This settlement represents our office’s continued commitment to ensuring compliance with important federal health care laws,” said Acting U.S. Attorney Stephen Muldrow of the Middle District of Florida.  “We appreciate that 21st Century Oncology self-reported a major fraud affecting Medicare, and we are also pleased that the company has agreed to accept financial responsibility for past compliance failures.”

According to the government, the settlement resolves conduct that was self-disclosed by the company regarding payments made by the government as part of the Medicare Electronic Health Records (EHR) Incentive Program.  Under the Medicare EHR Incentive Program, physicians who attest to their meaningful use of certified EHR technology may receive incentive payments and avoid downward adjustments to certain Medicare claims.  As part of its self-disclosure, 21st Century Oncology reported that it knowingly submitted, or caused the submission of, false attestations to CMS concerning employed physicians’ use of EHR software.  The company further reported that, in support of the attestations, its employees falsified data regarding the company’s use of EHR software, fabricated software utilization reports, and superimposed EHR vendor logos onto the reports to make them look legitimate. In addition, the settlement also resolves the government’s allegations regarding violations of the physician self-referral law (commonly referred to as the “Stark Law.”)  The Stark Law prohibits an entity from submitting claims to Medicare for designated health services performed pursuant to referrals from physicians with whom the entity has a financial relationship unless certain designated exceptions apply.  The government alleged that 21st Century Oncology and certain of its subsidiaries and affiliates violated the FCA by submitting, or causing the submission of, claims for services performed pursuant to referrals from physicians whose compensation did not satisfy any exception to the Stark Law.

The company reportedly entered into a five-year corporate integrity agreement to implement substantial internal compliance reforms and hire independent review organizations to review claims and arrangements annually.

The whistleblowers' share of the settlement will be $2 million.

A settlement has been reached to resolve False Claims Act allegations against Pine Creek Medical Center LLC.

The allegations arose from a lawsuit that claimed Pine Creek Medical Center LLC violated the False Claims Act by paying physicians kickbacks in the form of marketing services in exchange for surgical referrals.

According to the government, allegedly Pine Creek was involved in an illegal kickback scheme between 2009 and 2014 that involved the hospital paying for physicians' marketing and advertising services in exchange for patient referrals. Allegedly, Pine Creek paid for print, radio and television ads on behalf of physicians.

“Health care providers that attempt to profit from illegal kickbacks will be held accountable,” said Principal Deputy Assistant Attorney General Chad A. Readler, head of the Justice Department’s Civil Division.  “Improper financial incentives can distort medical decision making and drive up healthcare costs for federal health care programs and their beneficiaries.”

As part of the settlement, Pine Creek has agreed to enter into a corporate integrity agreement with the Department of Health and Human Services Office of Inspector General, which obligates the defendants to undertake substantial internal compliance reforms for the next five years.

The whistleblowers, Suzanne Scott and Savannah Sogar, former employees of Pine Creek’s marketing department, will receive $1,125,000.

A settlement has been reached to resolve False Claims Act allegations against Progressive Casualty Insurance Company and Progressive Garden State Insurance Company.

The allegations arose from a lawsuit that claimed Progressive Casualty Insurance Company, and Progressive Garden State Insurance Company, both part of the Progressive Group of Insurance Companies, violated the False Claims Act by causing Medicare and Medicaid to pay for claims for which the companies were responsible for.

If an individual has Medicare or Medicaid and other private health insurance coverage, each type of coverage constitutes a “payer.” The insurance coverage that pays first, referred to as the “primary payer,” typically pays to the limits of its coverage for an individual’s health care claims. Generally, if there are health care costs that the primary payer does not cover, these costs may then be paid by the individual’s other insurance coverage, referred to as the “secondary payer.”

Under federal and New Jersey state law, if an individual has both private insurance and Medicare or Medicaid, neither Medicare nor Medicaid may serve as the primary payer for certain claims and the private insurer must remain as the primary payer.

According to the government, allegedly  under “health first” automobile insurance policies that it offered, Progressive designated the policyholder’s health insurance carrier as the primary payer for medical claims that arose in connection with an automobile accident. Even though, under the law, Progressive could not decline to make primary payment to Medicare or Medicaid beneficiaries, the company permitted Medicare and Medicaid beneficiaries to elect a “health first” policy. Many of these policyholders in New Jersey who were Medicare or Medicaid beneficiaries incurred medical claims in connection with an automobile accident. Because Progressive’s “health first” policies designated the company as the secondary payer, Medicare and Medicaid improperly paid for claims that Progressive should have paid. The United States and New Jersey alleged that this conduct violated the Medicare Secondary Payer Act and Medicaid regulations and, as a result, Progressive caused false claims to be submitted to Medicare and Medicaid.

The whistleblowers' share of the settlement will be more than $600,000 of the more than $2 million that the United States and New Jersey recovered.

A settlement has been reached to resolve False Claims Act allegations against Chemed Corporation and Vitas Hospice Services.

The allegations arose from a lawsuit that claimed Chemed Corporation and various wholly-owned subsidiaries, including Vitas Hospice Services LLC and Vitas Healthcare Corporation submitted false claims for hospice services to Medicare.

According to the government, between 2002 and 2013 Vitas knowingly submitted or caused to be submitted false claims to Medicare for services to hospice patients who were not terminally ill.  Allegedly, Vitas billed for patients who were not terminally ill and thus did not qualify for the hospice benefit.  Furthermore, allegedly the defendants rewarded employees with bonuses for the number of patients receiving hospice services, without regard to whether they were actually terminally ill and whether they would have benefited from continuing curative care.

In addition, allegedly between 2002 and 2013, Vitas knowingly submitted or caused to be submitted false claims to Medicare for continuous home care services that were not necessary, not actually provided, or not performed in accordance with Medicare requirements. Allegedly, the defendants set goals for the number of continuous home care days billed to Medicare and used aggressive marketing tactics and pressured staff to increase the volume of continuous home care claims, without regard to whether the patients actually required this level of crisis care.

Medicare is a federal health insurance program for seniors and some younger people with disabilities, which is funded by taxpayers.

The Medicare program’s hospice benefit provides critical services to some of the most vulnerable patients in the country, and the Justice Department “will continue to ensure that this valuable benefit is used to assist those who need it – and not as an opportunity to line the pockets of those who seek to abuse it,” Readler said.

Reportedly, the settlement by Chemed also resolves three lawsuits filed under the whistleblower provision of the False Claims Act.

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

A settlement has been reached to resolve False Claims Act allegations against Catholic Health System Inc.

The allegations arose from a lawsuit that claimed Catholic Health System Inc subsidiary Home & Community Based Care submitted false claims to government health care programs.

According to the government, Home & Community Based Care (formerly known as Continuing Care) allegedly submitted or caused to be submitted false claims to Medicare for rehabilitation therapy services from January 2007 through December 2014. The claims involved both long- and short-term skilled nursing care. The nursing home subsidiary allegedly submitted claims to Medicare for the highest and most expensive levels of therapy when that type of therapy was not medically necessary or was unsupported by medical records.

“A healthcare system that is infected with dishonesty is susceptible to one of the worst afflictions known to mankind—human greed,” said Acting U.S. Attorney James P. Kennedy, Jr. “Today’s settlement demonstrates our unwavering commitment to eradicating this cancer from our federal health care programs.”

The allegations were brought forward by a whistleblower under the False Claims Act, which allows private citizens to bring lawsuits on behalf of the United Sates and receive part of the proceeds of a settlement.

According to the government, allegedly, Docs at the Door P.C., owned by Ajibola Ayeni, and Gateway Health Systems Inc., and its owners, Ajibola Ayeni, and Joy H. Turner-Ayeni, defrauded the United States by submitting false claims to Medicare.

Allegedly, Gateway Health Systems Inc and its owners received Medicare payments for home health services purportedly rendered to homebound individuals who were not actually in need of such services. Additionally, Docs at the Door P.C. allegedly falsely certified the non-homebound individuals as in need of home-health services, and fraudulently “upcoded” home physician visits to the second highest billing level in order to increase compensation from Medicare.

Reportedly, Docs at the Door and Gateway each claimed and were paid millions of dollars for services purportedly provided to Medicare beneficiaries.  At the direction of the Ayenis, the companies created false documentation to cover up the fact they were claiming services not rendered, as well as services that were not medically necessary because the beneficiaries were not confined to the home.  The Ayenis’ fraud scheme netted them millions of dollars in federal health care funds to which they were not entitled, the suit states. Also, the government contends that the Ayenis attempted to conceal certain assets from the government after learning of the investigation.

The government complaint arose from a lawsuit filed under seal in 2013 under the qui tam provisions of the False Claims Act which permits a private person to file a lawsuit on behalf of the government and to share in any recovery.

A settlement has been reached to resolve False Claims Act allegations against MediSys Health Network Inc.

The allegations arose from a lawsuit that claimed MediSys Health Network Inc., which owns and operates Jamaica Hospital Medical Center and Flushing Hospital and Medical Center, two hospitals in Queens, New York, violated the False Claims Act by engaging in improper financial relationships with referring physicians.

According to the government, the defendants allegedly submitted false claims to the Medicare program for services rendered to patients referred by physicians with whom the defendants had improper financial relationships. These relationships took the form of compensation and office lease arrangements that did not comply with the requirements of the Stark Law, which restricts the financial relationships that hospitals may have with doctors who refer patients to them.

“Health care providers who enter into improper financial relations with referring physicians compromise the referral process and encourage over-utilization of services, to the potential detriment of both patients and taxpayers,” said Acting U.S. Attorney Bridget M. Rohde for the Eastern District of New York. “We will hold health care providers accountable for their violations of federal law.”

The lawsuit was filed by Dr. Satish Deshpande, who will receive $600,000 as his share of the recovery.