In The News

PharMerica to Pay $31.5 Million for Medicare Fraud

In May 2015, PharMerica Corporation agreed to pay the United States $31.5 million to resolve a medicare fraud whistleblower lawsuit alleging that PharMerica violated the Controlled Substances Act. These allegations claimed that PharMerica dispensed Schedule II controlled drugs without a valid prescription and billed these prescriptions to Medicare in violation of the False Claims Act; these drugs, which were improperly dispensed, cost taxpayers millions of dollars.

PharMerica operates as a pharmacy for long-term care patients. Many of its drugs are controlled substances under Schedule II of the Controlled Substances Act, such as oxycodone and fentanyl, which have a potential for abuse and can cause significant damage to the patient. PharMerica was accused of dispensing these drugs in a widespread scheme across the nation in non-emergency situations and without first obtaining a treating physician’s written prescription. The qui tam law suit also alleged PharMerica enabled nursing home staff to order the drugs without first ascertaining that a physician had documented a medical judgement that the drugs were necessary and should be administered to the patients.

The whistleblower law suit was brought by a pharmacist formerly employed by PharMerica, who saw the wrongful conduct and decided to become a False Claims Act whistleblower. As a whistleblower reward, that pharmacist will receive $4.3 million of the recovery.

The False Claims Act suit was settled as the result of the joint efforts of Department of Justice, the U.S. Attorney Office for the District of Rhode Island, and the U.S. Attorney Office for the Eastern District of Wisconsin

Hospital Administrator Gets 40 Years in Prison for Medicare Fraud

In May, the former assistant administrator of Riverside General Hospital was sentenced to 40 years in prison for his participation in a massive Medicare fraud scheme. His sentencing followed a guilty plea that he and others at the hospital committed Medicare fraud by paying illegal kickbacks to recruit Medicare patients and then billed for partial hospitalization program services that were either not medically necessary or, in many instances, never provided at all. The defendant pled guilty to conspiracy to commit health care fraud, conspiracy to pay and receive kickbacks and paying illegal kickback. This scheme involved paying kickbacks to recruiters and group home operators to provide the hospital with intelligible patients for the hospital’s partial hospitalization program. Thus far, at least ten people have been convicted for their participation in the scheme which falsely billed $116 million to the Medicare program. Others convicted in the scheme included the owners of the hospital, a patient file auditor and a paid patient recruiter.

The criminal case was the result of an investigation involving the FBI, the Texas Attorney General’s Medicare Fraud Control Unit and the Health and Human Services’ Office of the Inspector General, and was part of Medicare Fraud Strike Force. The case was prosecuted by the U.S. Attorney office in the Southern District of Texas

DaVita HealthCare Sets Aside $495 Million for Qui Tam Case

Whatever happened to business integrity? What happened to the days of being able to trust the businesses of our nation? More importantly, how can we trust companies that do multi-million dollar business with the Federal Government? When fraudulent practices reign, what happens to the innocent victims?

DaVita HealthCare Partners Inc., a leading U.S. kidney dialysis provider, has announced that it is setting aside $495 million to settle a false claim lawsuit for Medicare fraud in its dialysis clinics. This case, one of the largest False Claims Act settlements, involves allegations that DaVita HealthCare purposely used larger dose vials of Epogen than it knew would be needed for patient dialysis treatments. This resulted in the intentional wasting of medicine dosages in order to fraudulently cause increased payments by Medicare. The qui tam lawsuit was filed in Atlanta and alleged that DaVita’s conduct had been occurring from 2003 through 2010, and involved thousands of instances of fraud and false claims. This qui tam whistleblower case was brought by a doctor and a nurse who worked in DaVita’s dialysis clinics in Georgia.

This case is exactly what the False Claims Act is for. As with almost every qui tam case, this Medicare fraud allegation involved employees realizing that the company they worked for was cheating and they knew they had to do something about it. One of the biggest concerns for employees to come forward and blow the whistle is the fear of retaliation. The False Claims Act offers protection and whistleblower rewards for employees and others who blow the whistle on companies engaging in fraud in government contracts and other federally funded programs. Who will step up to the plate to protect their whistleblower rights when the help is needed most? Only whistleblower law firms who specialize in handling cases in qui tam litigation can

First Tennessee Bank N.A. Agrees to Pay $212.5 Million to Resolve False Claims Act Liability

As evidenced by the somewhat recent financial crisis and housing market downturn, fraudulent single family home mortgages were rampant for quite a few years. Slowly but surely, some of the entities who originated those fraudulent home mortgages are being brought to justice. Often these cases, filed under the False Claims Act, come to be thanks to a whistleblower within the company finally speaking up.

First Tennessee Bank N.A., headquarted in Memphis, Tennessee, recently agreed to pay the United States $212.5 million to resolve allegations that it violated the False Claims Act by knowingly originating and underwriting mortgage loans insured by the U.S. Department of Housing and Urban Development’s Federal Housing Administration that did not meet applicable requirements. According to the Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division, “First Tennessee’s reckless underwriting has resulted in significant losses of federal funds…”

First Tennessee Bank’s fraudulent underwriting and failure to report even a single deficient mortgage to the FHA caused the FHA to insure hundreds of loans that were not actually eligible for insurance and, as a result, the FHA later suffered substantial losses. When entities such as First Tennessee Bank profit handsomely while taxpayers incur substantial losses they must be brought to justice with a qui tam lawsuit, which is what happened in this case. As a part of the settlement, First Tennessee Bank admitted to a series of fraudulent acts that led them to a failure to comply with FHA origination, underwriting and quality control requirements.

Thinking about speaking up and reporting fraudulent behavior within your company? Thanks to whistleblower protections and experienced qui tam law firms with the expertise and resources to proceed with these cases, you have knowledgeable counsel available to guide you through the decision process of stepping forward

Mortgage Fraud Recovery

Flagstar Bank FSB has agreed to pay $132.8 million to settle False Claims Act allegations that it improperly approved home mortgage loans for government insurance. The settlement by the company based in Troy, Michigan, is one of the first successful mortgage fraud prosecutions under the False Claims Act. Under the terms of the settlement, Flagstar accepted responsibility for its conduct and committed to reform its business practices to ensure compliance with Department of Housing and Urban Development requirements.

Drug pricing settlement

General Electric Co.’s health-care unit will pay more than $30 million to settle claims that a company it bought in 2004 provided false information to Medicare to pad billings for a drug used to diagnose heart disease. The fraud settlement involves the drug Myoview sold by Amersham Health Inc. and resolves claims filed under the False Claims Act. Under drug pricing laws, pharmaceutical providers are required to report best price and average sales price calculations for Medicare reimbursement.

Pharmaceutical Fraud Recovery

Dava Pharmaceuticals Inc. has agreed to pay $11 million to settle allegations that it violated the False Claims Act by misreporting drug prices in order to reduce its Medicaid Drug Rebate obligations.

The settlement resolves allegations that between Oct. 1, 2005 and Sept. 30, 2009, Dava and its corporate predecessors knowingly underpaid their rebate obligations under the Medicaid Prescription Drug Rebate Program. Under that program, participating drug companies are required to pay quarterly rebates to state Medicaid programs based, in part, on whether a drug is a “generic” or “branded” product and the difference between what the health care program paid for the drug and prices paid by other purchasers.

In order to reduce its Medicaid rebate obligation, Dava incorrectly treated its version of the drugs cefdinir, clarithromycin and methotrexate as “generic” drugs rather than “branded” products, thereby lowering the overall percentage rebate payable to Medicaid. In addition, Dava further reduced its Medicaid rebate obligations by incorrectly calculating average manufacturer prices for its versions of the drugs cefdinir, clarithromycin, methotrexate and rheumatrex. As a result, Dava underpaid drug rebates to the Medicaid program and overcharged certain public health service entities for these products.

Boeing Settlement

The Boeing Company has agreed to pay the United States $4.4 million and to undertake several programmatic changes, resolving qui tam allegations that it improperly billed the Department of Defense for work at Boeing’s facility in Ridley Park, Pennsylvania. Beginning in approximately 2003, the United States Department of Defense awarded Boeing contracts to produce and modify Chinook helicopters as part of the Army’s effort to modernize its fleet of heavy lift helicopters. More than 100 new Chinooks were ordered, and Boeing also agreed to “remanufacture” several hundred older Chinook helicopters by overhauling their airframes to accommodate upgrades of the helicopter’s avionics and engines. The vast majority of the work performed in the Chinook remanufacturing program was paid based on a pre-negotiated price. However, Boeing instructed the mechanics assigned to the Chinook program to perform other, non-billable work while separately billing the United States for their time, resulting in the United States being charged for work for which it had already paid.

Software Pricing Settlement

Oracle and Oracle America has agreed to pay $199.5 million to the U.S. government to resolve a False Claims Act lawsuit.

The settlement concerns a 1998 contract in which Oracle agreed to sell software licenses and technical support to federal government entities through the General Services Administration’s Multiple Award Schedule program

The settlement resolves allegations that Oracle repeatedly failed to meet its contractual obligations to give the GSA full and accurate information about its commercial sales practices, and that Oracle lied to the GSA about its sales practices and discounts, the officials said. The lawsuit alleged that, based on Oracle’s actions, the United States accepted lower discounts and, as a result, paid far more than it should have for Oracle products.

The MAS program streamlines the procurement process for the government and other GSA-authorized purchasers. To be awarded a MAS contract, the broad marketplace access and the administration simplicity that comes from selling to hundreds of government purchasers through one central contract, contractors must agree to disclose commercial pricing policies and practices and to abide by the contract terms.