In The News

Drug Maker to Pay More Than $35 Million to Resolve Criminal Charges and Civil False Claims Allegations

The federal government continues to pursue companies that fail to follow programs that manage the risk that are associated with certain prescription drugs. This was proven late last month, when the Justice Department announced that Aegerion Pharmaceuticals Inc. – a subsidiary of Novelion Therapeutics Inc. – has agreed to plead guilty to charges relating to its prescription drug, Juxtapid. The government alleges that Aegerion misbranded its drug Juxtapid because it failed to comply with a Risk Evaluation and Mitigation Strategy (REMS). The resolution includes a deferred prosecution agreement relating to criminal liability under the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Moreover, the settlement agreement Aegerion entered into resolves allegations that it caused false claims to be submitted to a federal health care program for Juxtapid. Finally, Aegerion entered into a civil consent decree of permanent injunction. The decree is aimed at preventing future violations of the Federal Food, Drug, and Cosmetic Act (FDCA).

“Today’s settlement shows that the government will continue to hold accountable drug companies that violate laws designed to protect the health and safety of patients,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Aegerion has agreed to plead guilty to breaking the law. The Justice Department will continue to ensure that taxpayers do not foot the bill when such conduct occurs.” From December 2012 to December 2015 – when Aegerion introduced its drug Juxtapid to the market – the government alleges that it was misbranded under the rules of the FDCA. During this period the drug was approved to treat patients with homozygous familial hypercholesterolemia (HoFH), a rare disorder. This disorder causes patients to have high levels of circulating LDL-C or “bad” cholesterol. Juxtapid carried a warning that it might cause adverse gastrointestinal reactions as well as liver toxicity. Because of this, the FDA required a Juxtapid to have a REMS. The purpose of this REMS was to educate prescribers about this risk for liver toxicity in patients.

The Justice Department provided evidence that Aegerion not only failed to give providers complete information about HoFH and how to properly diagnose it, but that they also filed a misleading REMS assessment report about the drug. Moreover, the government alleges that Aegerion’s management and sales staff distributed Juxtapid not only for the treatment of HoFH specifically but also for the treatment of high cholesterol in general. Under the terms of the plea agreement, Aegerion has agreed to pay a criminal fine and forfeiture of $7.2 million. A deferred prosecution agreement resolves allegations that Aegerion conspire to violate HIPAA, 42 U.S.C. §§ 1320d-6(a) and 1320-6(b) (3) in that it conspired to obtain patients’ personally identifiable health information without patient authorization. Under the terms of the deferred prosecution agreement, Aegerion will implement enhanced compliance provisions.

The government also alleges that Aegerion violated the Anti-Kickback Statute (AKS) by funneling funds through patient Services Inc. (PSI) an entity that claimed to be a non-profit patient assistance organization. The federal share of the $28.8 million civil false claims settlement is $26.1 million and the state portion is $2.7 million. “Aegerion put profits over patient safety and enriched itself at taxpayer expense,” said Acting U.S. Attorney William D. Weinreb for the District of Massachusetts. “Our Office is committed to protecting patient safety and the integrity of federal health care programs, and we will continue to use our criminal and civil authority to ensure that drug companies play by the rules that protect the public, ensure quality of care, and preserve patient privacy.”  This settlement resolves a lawsuit that was filed by three former employees of Aegerion, under the qui tam or whistleblower, provisions of the False Claims Act. This act permits private individuals to sue on behalf of the government for false claims and to share in any recovery. Relators will receive $4.7 million from the federal proceeds of the civil false claims settlement.


MediSys Health Network Inc. Agrees to Pay $4 Million to Resolve Alleged False Claims Act Violations

The government’s pursuit of health care providers who engage in improper relationships with referring physicians continues unabated by the change of administrations. Proof of this came last week when the Justice Department announced that New York Hospital operator MediSys Health Network Inc., (MHNI) has agreed to pay $4 million to settle allegations that it violated the False Claims Act by providing improper payments to referring physicians. MHNI operates Jamaica Hospital Medical Center and Flushing Hospital and Medical Center in Queens, New York. The settlement resolves allegations that the defendants submitted false claim to Medicare and that they did not comply with the requirements of the Stark Law (42 U.S. Code § 1395nn). The Stark law prohibits physicians from referring Medicare patients to entities with which they may have a financial relationship. The relationships that the defendants are accused of having with physicians took the form of office lease arrangements and compensation.

 

“This recovery should help to deter other health care providers from entering into improper financial relationships with physicians that can taint the physician’s medical judgment, to the detriment of patients and taxpayers,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “When hospital operators provide financial incentives to doctors for patient referrals, individuals rightfully wonder whose best interests are being served,” said Special Agent in Charge Scott J. Lampert for U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “We will continue to investigate such entities who fraudulently bill government health programs.”

 

The lawsuit was filed by Dr. Satish Deshpande under the qui tam, or whistleblower, provisions of the False Claims Act. Under the Act, private citizens can bring suit on behalf of the United States and share in any recovery. Dr. Deshpande will receive $600,000 as his share of the recovery.  The case, United States ex rel. Deshpande, et al. v. The Jamaica Hospital Medical Center, et al., Case No. 13-cv-4030 (E.D.N.Y.), was handled by Senior Trial Counsel David T. Cohen of the Civil Division’s Commercial Litigation Branch, Assistant U.S. Attorney Kenneth M. Abell of the U.S. Attorney’s Office for the Eastern District of New York and Associate Counsel David Fuchs from HHS-OIG.

 

 


Drug Manufacturer Novo Nordisk, Inc. Agrees to pay $58 million to Resolve Allegations that it Violated the False Claims Act and that it also Failed to Comply with FDA-mandated Regulations

When pharmaceutical companies violate the law they endanger millions of Americans and lessen the effectiveness of prescribing physicians. This was the case when last week the Justice Department announced that Pharmaceutical Manufacturer Novo Nordisk Inc. has agreed to pay the government $58.65 million to resolve allegations that it failed to comply with the FDA-mandated Risk Evaluation and Mitigation Strategy (REMS) for its Type II diabetes medication – Victoza. The settlement includes $12.15 million for alleged violations of the Federal Food, Drug, and Cosmetic Act (FDCA) and a $46.5 million payment for alleged violations of the False Claims Act (FCA). Novo Nordisk, Inc. is alleged to have committed these violations from 2010 – 2014. “Today’s resolution demonstrates the Department of Justice’s continued commitment to ensuring that drug manufacturers comply with the law,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “When a drug manufacturer fails to share accurate risk information with doctors and patients, it deprives physicians of information vital to medical decision-making.”

 

In a civil complaint filed in the U.S. District Court for the District of Columbia last week, the government alleges that the FDCA required Novo Nordisk, Inc. to have its drug Victoza follow a REMS to mitigate the potential risk of a rare form of cancer called Medullary Thyroid Carcinoma (MTC) associated with the drug. The REMS required Novo Nordisk, Inc. to inform physicians of the potential risks of MTC.  Failing to do so renders a drug misbranded under the law.  Moreover, the government alleges that some of Novo Nordisk’s sales representatives lead physicians to believe that the Victoza REMS-required message they received was erroneous, irrelevant, or unimportant. This in turn led some physicians to be unaware of the potential risk posed by Victoza when prescribing the drug. These actions violated provisions of the FDCA.

 

Finally, a 2011 survey showed that half of the primary care doctors polled were unaware of the risk posed by Victoza and its association with MTC. Rather than implementing a modification the government made to increase awareness of the potential risk of MTC, Novo Nordisk, Inc. instructed its sales force to provide physicians with information that obscured the risk information. As part of the settlement, Novo Nordisk, Inc. has agreed to disgorge $12.15 million in profits it derived from its illegal conduct. “Novo Nordisk Inc. sales representatives misled physicians by failing to accurately disclose a potential life threatening side effect of a prescription drug, and needlessly increased risks to patients being treated with this drug,” said Assistant Director in Charge Andrew W. Vale of the FBI’s Washington Field Office. “The FBI is committed to ensuring that the private industry provides honest and accurate risk information to the public and will continue to work closely with our law enforcement partners to investigate companies who do not comply with FDA-mandated policies.”

 

Novo Nordisk is committed to paying an additional $46.5 million to the federal government and the states to resolve claims under the FCA and state false claim acts. Novo Nordisk is alleged to have caused false claims to be submitted from 2010 to 2014. The Food and Drug Administration (FDA) has not approved Victoza as safe and effective for use by adult patients who do not have Type II diabetes. As a result of today’s FCA settlement, the federal government will receive $43,129,026 and state Medicaid programs will receive $3,320,963. The Medicaid program is funded jointly by the state and federal governments.

 

 


CHRISTUS Medical Center and CHRISTUS Health to Pay More than $12 Million to Settle Alleged False Claims Act Violations

Earlier this month, the Department of Justice announced that CHRISTUS St. Vincent Regional Medical Center (St. Vincent) and its partner, CHRISTUS Health (CHRISTUS), have agreed to resolve allegations that they violated the False Claims Act by making illegal donations to county governments.  These funds were ultimately used to fund the state’s share of Medicaid payments to the hospital. The providers have agreed to pay $12.24 million, plus interest as part of the settlement. “Congress expressly intended that states and counties use their own money when seeking federal matching funds,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Using local funds provides an incentive for the counties and states to, among other things, hold down costs rather than rely on non bona-fide donations by private providers.”

 

Under a program known as the Sole Community Provider (SCP) program, the state of New Mexico was to provide supplemental Medicaid funds to hospitals in mostly rural communities. Thus a restriction on permissible donations was placed on private hospitals. The federal government reimbursed the state of New Mexico approximately 75 percent of its health expenditures under SCP.  The SCP program was created by Congress to curb possible abuses and to ensure that states had the means to curb rising Medicaid costs. The government alleges that between 2001 and 2009, St. Vincent and CHRISTUS allegedly made non-bona fide donations causing the presentment of false claims by the state of New Mexico to the Medicaid program. (New Mexico’s SCP was discontinued in 2014.)

 

“Protecting the integrity of the Medicaid program is crucial because millions of Americans, including hundreds of thousands of New Mexicans, depend on the program for medical care and related services,” said Acting U.S. Attorney James D. Tierney for the District of New Mexico. “This case illustrates our commitment to ensuring that government funds are legally obtained and used for their intended purposes. We will use all available civil remedies to recover the ill-gotten gains obtained by those who defraud government healthcare programs.”  The settlement stems from a lawsuit originally filed by a former New Mexico Indigent Health Care Administrator under the qui tam provisions of the False Claims Act. Under these provisions, private individuals are permitted to sue on behalf of the government and to share in any subsequent recovery. In this case, the whistleblower will receive $2.249 million as her share of the settlement.

 

 

 


Huntington Ingalls Industries Inc. to Pay More than $9 Million to Settle False Allegations

Once again the government has proven that fraud and bribery are not victimless crimes. They impact taxpayers in every way. It proved this last week when it announced that Huntington Ingalls Industries (HII) – a defense contractor based in Newport, Virginia – has agreed to pay a $9.2 million settlement to resolve allegations that it violated the False Claims Act by deliberately overbilling for labor completed on U.S. Navy and Coast Guard ships. Under the settlement, HII will pay $7.9 million which will be combined with an earlier payment it made of $1.3 million. “Contractors that knowingly bill the government in violation of contract terms will face serious consequences,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “This settlement demonstrates, once again, that we will not tolerate defense contractors who falsely charge the armed forces or any agency of the United States.”

The settlement resolves allegations that HII mischarged for labor it performed on various U.S. Navy and Coast Guard contracts dating back to 2003. HII is alleged to have

  1. Charged for labor on particular contracts even though the costs were not incurred by those contracts
  2. Billed for driver operations to support ship construction for work that did not occur.

“The Southern District of Mississippi will remain vigilant in identifying and prosecuting those involved in nefarious activities and fraudulent billing, which ultimately result in substantial cost overruns on Navy and Coast Guard shipbuilding projects,” said Acting U.S. Attorney Harold Brittain. Brittain also noted three earlier guilty pleas in a related criminal matter in the Southern District of Mississippi (United States v. N. R. Holden & R.G. Gardner, Criminal No 1:15-cr-42 HSO-RHW, United States v. R.M. Wilson, Criminal No 1:16-cr-34-LG-RHW.) “Contractors are expected to comply with their statutory obligations and act in good faith when dealing with the Department of Defense (DOD),” commented John F. Khin, Special Agent in Charge, Southeast Field Office, and Defense Criminal Investigative Service. “This settlement is the culmination of hard work by DCIS, our investigative partners, the Department of Justice, Civil Division, Commercial Litigation Branch, and the U.S. Attorney’s Office for the Southern District of Mississippi; and clearly demonstrates that combatting fraud, waste and abuse within DOD contracting remains a top priority.”

The labor mischarging allegations resolved by this settlement were originally raised in a lawsuit brought by Byron Faulkner, a former HII employee, under the qui tam, or whistleblower provisions of the False Claims Act. Under these provisions, private citizens are able to sue on behalf of the federal government for false claims and to share in any subsequent recovery. Mr. Faulkner will receive more than $1.5 million as his share of the settlement.


The Government files Complaint to Recover Millions of Grant Dollars it says the City of L.A. and CRA/LA Obtained Improperly

Sometimes alleged fraud and abuse occur on a much greater scale than that which is caused by private companies. This was proven to be the case when earlier this month, the Justice Department filed a complaint against the City of Los Angeles and the CRA/LA alleging that the two fraudulently obtained millions of dollars in housing grants from the U.S. Department of Housing and Urban Development (HUD) by falsely claiming that money was being spent in compliance with the government’s accessibility laws. The “complaint in intervention” replaces a complaint that was previously filed by a whistleblower. The complaint in intervention alleges that the city and CRA/LA received federal money by falsely promising to create accessible housing for the disabled. Instead of doing this, it is alleged that the two used the money to create inaccessible housing that actually deprived people with disabilities equal opportunity to housing of their choice.

According to the complaint, the city of L.A. repeatedly certified its compliance with federal accessibility laws in order to obtain federal funds even though it did not take the necessary steps to comply with said laws. Additionally, the complaint alleges that HUD-assisted apartment buildings provided by the city failed to meet even the minimal accessibility requirements. Among the items the city approved and which made the buildings fail to meet accessibility requirements are:

  • slopes and ramps that were too steep for safe passage by persons with mobility disabilities;
  • door thresholds that were too tall for wheelchairs to roll over;
  • steps that prohibited access to common areas;
  • sinks, grab bars, mailboxes and circuit breakers mounted beyond the reach of wheelchair users

“Despite the federal government investing hundreds of millions of dollars in Los Angeles to create housing for everyone, the City of Los Angeles instead created housing only for some,” said Acting U.S. Attorney Sandra R. Brown for the Central District of California. “For 17 years, the city falsely certified that it had complied with federal law and covered up its repeated disregard of historic and important civil rights laws.” The laws that the CRA/LA are alleged to have violated include Section 504 of the Rehabilitation Act (1973), the Americans with Disabilities Act (1990) and the Fair Housing Act (1968). These laws were passed by Congress in order to ensure that people with disabilities have equal access to housing and that they are able to become integrated into the larger society.

The accessibility laws for which the city of L.A. and CRA/LA are required to comply, stipulate that recipients of federal funds must operate housing that is in compliance and that they must also:

  • Develop non-discriminatory policies and practices, hire a coordinator knowledgeable about accessibility, and implement a grievance procedure that allows for just resolution of complaints.
  • Maintain a publicly available list of accessible units and their accessibility features so that people who require those features are able to find housing.

The city of LA and CRA/LA are alleged to have violated all of these requirements and many others. The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act. These provisions permit private parties to sue on behalf of the federal government and to share in any subsequent recovery.


Mortgage Lending Company PPH Agrees to Pay $74 Million Settlement to Resolve Alleged False Claims Act Violations

The government’s crackdown on fraud and abuse has netted several companies who allegedly conspired to put both taxpayers and borrows at risk of significant financial losses. Last week, the Justice Department announced that mortgage lenders PPH. Corp, PPH Mortgage Corp. and PPH Home Loans have collectively agreed to pay it more than $74 million to resolve allegations that they knowingly originated and underwrote mortgage loans that did not meet applicable requirements for said loans. These loans were insured by agencies such as the U.S. Department of Housing and Urban Development (HUD), the Federal Housing Administration (FHA) and guaranteed by the United States Department of Veterans Affairs (VA), and purchased by the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”). PPH is slated to pay $65 million to the FHA and $9.45 million to the VA and FHFA.

 

“Government mortgage programs designed to assist homeowners — including programs offered by the FHA, VA, Fannie Mae and Freddie Mac — depend on lenders to approve only eligible loans,” said Acting Assistant Attorney General Chad A. Readler, head of the Justice Department’s Civil Division. “The Department has and will continue to hold accountable lenders that knowingly cause the government to guarantee, insure, or purchase loans that are materially deficient and put both the homeowner and the taxpayers at risk.” Since January 2006, PPH has participated as a Direct Endorsement lender (DEL) in the FHA insurance program. As a DEL, PPH had the authority to originate, underwrite, and endorse mortgages for the FHA. Additionally, since PPH participated as a DEL, it was required to follow certain program rules for properly underwriting and certifying mortgages for the FHA.

As part of the settlement, PPH admitted to the following facts concerning the FHA loans:

 

  • It failed to document borrowers’ creditworthiness including employment verification, credit reports etc.
  • It failed to verify borrowers’ debt-to-income ratio.
  • It failed to verify borrowers’ minimum statutory investment for their loan.

Moreover, PPH did not self-report any material violations of FHA requirements to HUD as required by the FHA until after 2013. It was first required to do so in 2006. As a result of these omissions and PPH’s conduct, PPH admitted that the loans they endorsed were not eligible for FHA mortgage insurance. This, the government maintains, caused HUD to incur substantial loses when it paid insurance claims on those loans. The settlement also resolves the government’s claims that PPH originated VA loans that did not meet that agency’s requirements. Finally, the settlement resolves the government’s allegations that PPH originated and sold loans to Freddie Mac and Fannie Mae that did not meet their requirements.

“This settlement resolves allegations of reckless origination and underwriting of VA guaranteed mortgage loans,” said Michael J. Missal, Inspector General, for the Office of Inspector General for the Department of Veterans Affairs (VA OIG). “It sends a clear message that the VA OIG will aggressively protect the integrity of this crucial program which helps so many of our veterans buy, build, or repair their homes. I would also like to thank the U.S. Attorney’s Offices for partnering with us to achieve this significant result.” The allegations resolved by these settlements came about as a result of a whistleblower lawsuit that was filed under the False Claims Act by Mary Bozzelli. Bozzelli is a former PPH employer who is scheduled to receive $9,067,377.33 from the settlements.

 


Financial Freedom Agrees to Pay Government $89 Million to Settle Allegations that it improperly serviced Federally Insured Reverse Mortgage Loans

Often the government crackdown on fraud and abuse affects some of society’s most vulnerable citizens – the elderly. The fact was demonstrated last month, when the Justice Department announced that Financial Freedom had agreed to a settlement with the United States for more than $89 million. The government alleged that the company – which is headquartered in Austin, Texas – violated the False Claims Act and the Financial Institutions Reform Recovery and Enforcement Act of 1989 (FIRREA) in connection with its participation in a ‘reverse mortgage’ program. “This settlement represents our office’s continued commitment to protecting the financial solvency of vital financial programs designed to benefit America’s seniors,” said Acting U.S. Attorney Stephen Muldrow of the Middle District of Florida. “HECM servicers must be held accountable for failing to adhere to FHA requirements that are designed to ensure the continued viability of the HECM program. We are pleased that Financial Freedom agreed to accept financial responsibility for these failures.”

 

Reverse mortgage loans are a financial instrument through which older people are able to access equity in their homes by borrowing against the equity they have built. The government protects – via the FHA – lenders from loss by providing mortgage insurance. Further, the FHA reimburses lenders who are unable to recoup the full amount of the loan. However, the loan servicer must first meet a number of regulatory requirements and deadlines before he/she is reimbursed. The United States alleges that from March 31, 2011 to August 31, 2016, Financial Freedom obtained additional interest on insurance payments that they were not entitled to receive. Financial Freedom allegedly did so by failing to meet appraisal deadlines, falling to submit claims to HUD and by neglecting to pursue foreclosure proceedings.

The investigation into Financial Freedom’s alleged practices arose from a declaration filed pursuant to FIRREA by Sandra Jolley. Jolley is a consultant for the estates of borrowers who took out the HECM loans. Under the FIRREA, whistleblowers may file declarations alleging violations of the statute and share in any subsequent recovery. Ms. Jolley will receive $1.6 million from the settlement.

“Today’s settlement agreement resolves allegations that this lender failed to comply with FHA servicing requirements and sought to receive financial gains that it was not legally entitled to,” said HUD Inspector General David A. Montoya. “These actions today demonstrate our continued commitment to address and halt business practices that pose a serious risk to the FHA program and the public’s trust in HUD administered programs.” If you know of abuse that has been committed against the government or one of its agencies, you are encouraged to report it and to contact a whistleblower law firm. The settlement was the result of the coordinated efforts of several state and federal agencies who have been participating in the government’s involvement in whistleblower Medicare cases.


Three Medicare Companies Agree to Pay the Government $19.5 Million to Resolve False Claims Act Allegations

The government’s crackdown on Medicare fraud continues to net companies that allegedly choose profit over patient wellbeing. This was evidently the case when earlier this month, the Justice Department announced that Foundations Health Solutions Inc. (FHS), Olympia Therapy, Inc. (Olympia), and Tridia Hospice Care Inc. (Tridia) and two of their executives have agreed to pay approximately $19.5 million to resolve allegations that they submitted false claims for medically unnecessary rehab therapy and hospice services. “Clinical decisions should be based on patient needs rather than corporate profits,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “This settlement reflects the Department’s continuing commitment to safeguarding patients and the Medicare system.” All three companies are based in Ohio.

FHS provides management services to skilled nursing facilities (SNFs), Olympia provided rehab therapy services to patients at SNFs and Tridia provides hospice care services. Brian Colleran and Daniel Parker – two executives who have agreed to pay a portion of the settlement – controlled or owned Provider Services Inc. (PSI), BCFL Holdings Inc. (BCFL), FHS, Olympia, and Tridia between 2008 and 2013. The settlement resolves allegations that from January 2008 through December 2012, Olympia and PSI/BCFL submitted false claims for unnecessary rehab services at 18 SNFs. The government further alleges that the claims caused therapy services to be provided at excessive levels in order to increase Medicare reimbursement.

Further, the government contends that from April 2011 through December 2013 Tridia submitted false claims to Medicare for hospice services that were provided to patients who had not received proper medical examinations or certifications. Finally, the settlement resolves allegations that from January 2008 through December 2012, Colleran and Parker solicited and received kickbacks from SNFs managed by PSI or BCFL to Amber Home Care LLC. “Medicare providers have a legal and moral obligation to provide only those services that are medically necessary and to ensure that claims seeking payment accurately reflect the services that are actually provided,” said Special Agent in Charge Lamont Pugh III of the U.S. Department of Health & Human Services, Office of Inspector General (HHS-OIG). “The misrepresentation or falsification of those claims not only violates provisions of the False Claims Act but the public’s trust. The OIG will continue to aggressively investigate allegations of potential violations of this nature.”

As part of the settlement agreement reached earlier this month, FHS and Colleran have entered into a five-year Corporate Integrity Agreement (CIA), with the HHS Office of the Inspector General (HHS-OIG). The CIA is designed to compel FHS and Colleran to take steps to avoid future fraud and abuse. The settlement resolves allegations that came about as a result of two lawsuits that were filed by Vladimir Trakhter, a former Olympia employee, and Paula Bourne and La’ Tasha Goodwin, former Tridia employees. The lawsuits were filed in Ohio federal court under the qui tam or whistleblower provisions of the False Claims Act. These provisions allow private citizens to sue on behalf of the federal government and to share in any recovery.  Mr. Trakhter will receive approximately $2.9 million and Ms. Bourne and Ms. Goodwin collectively will receive $740,000.

 


Several Cardiac Monitoring Companies Have Agreed to Pay $13.45 Million to Resolve False Claims Act Allegations

The Department of Justice announced last month that AMI Monitoring Inc., its owner Joseph Bogdan, Medi-Lynx Cardiac Monitoring LLC., and Medicalgorithmics SA, have all agreed to resolve allegations that they violated the False Claims Act. AMI Monitoring Inc., also known as Spectocor, and Bogdan have agreed to pay $10.56 million, and Medi-Lynx and Medicalgorithmics have agreed to pay $2.89 million. “Independent diagnostic testing facilities that improperly steer physicians to order higher levels of service will be held accountable,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “We will vigilantly ensure the appropriate use of our country’s limited Medicare funds.”

 

The government says that the companies intentionally guided patients towards more expensive levels of cardiac monitoring services than were medically necessary. Specifically, from 2011 to 2016 Spectocor, marketed a pocket ECG machine capable of several kinds of cardiac monitoring – holter, event, and telemetry. However, during the enrollment process for the cardiographic services, physicians were only able to choose the service that allowed for the highest rate of reimbursement from Medicare. Medicalgorithmics SA acquired a controlling interest in Medi-Lynx in September 2016.

 

“Sophisticated medical technology can be used to help doctors dramatically improve the lives of their patients, but it can also be misused to fraudulently increase medical bills,” said Acting U.S. Attorney William E. Fitzpatrick for the District of New Jersey. “Today’s settlement demonstrates that the federal government is committed to preserving the integrity of the Medicare system and ensuring that Medicare funds are spent only for patient care.” Eben Steele, a former sales manager at Spectocor, filed the original lawsuit in a federal court in Newark, New Jersey that resulted in last month’s multi-million dollar settlement. Mr. Steele was able to file his suit under the qui tam or whistleblower provisions of the False Claims Act. This Act allows private citizens to sue on behalf of the federal government in cases involving false claims and to share in any subsequent recovery. Mr. Steele’s share of the settlements amounts to $2.4 million.

 

The government’s intervention in this matter is a part of its ongoing efforts to investigate healthcare fraud. This initiative began during the previous administration.   Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).