In The News

State-of-the-Art Cancer Treatment Provider Agrees to Pay $26 Million to Settle Alleged False Claims Act Violations

The number of many physicians who are incentivized to enter into illegal financial arrangements with health care providers is still quite alarming despite the government’s ongoing campaign against such actions. This was demonstrated earlier this month when the Department of Justice announced that 21st Century Oncology Inc – an integrated cancer care provider based in Florida – and several of its affiliates and subsidiaries have agreed to pay $26 million to settle charges that it electronically submitted false claims to Medicare in violation of the False Claims Act and that it engaged in improper financial relationships with several physicians. “The Justice Department is committed to zealously investigating improper financial relationships that have the potential to compromise physicians’ medical judgment,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “However, we will work with companies that accept responsibility for their past compliance failures and promptly take corrective action.” 21st Century Oncology, which operates several facilities throughout the United States, employs physicians in several specialty fields including radiation oncology, medical oncology and urology.

The settlement reached between the United States and 21st Century Oncology resolves behaviors that the company engaged in and eventually disclosed to the Justice Department involving the Medicare Electronic Health Records (EHR) Incentive Program. The Medicare EHR Incentive Program is designed to help physicians to receive incentive payments and avoid downward adjustments in certain Medicare claims. This is only to be the case when physicians can attest to the meaningful use of certified EHR technology. 21st Century Oncology disclosed that it knowingly submitted false attestations to CMS concerning employed physicians’ use of EHR software. The company further disclosed that it falsified data regarding the use of EHR software, made up utilization reports and that it copied EHR vendor logos onto reports in order to make them appear to be legitimate.

“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.” In addition to False Claims Act violations, the settlement also resolves allegations that 21st Century Oncology violated the physician self-referral law also known as “Stark Law.” The Stark Law prohibits physicians from referring patients for certain designated health services paid for by Medicare to any entity in which they have a “financial relationship.” The government alleges that 21st Century Oncology violated this law by submitting claims for services performed pursuant to referrals from physicians whose compensation did not satisfy any exception to the Stark Law.

The Stark Law allegations were brought about as the result of a lawsuit that was filed by Matthew Moore, 21st Century Oncology’s former Interim Vice President of Financial Planning under the qui tam provisions of the False Claims Act. Under this Act, private parties are allowed to sue for false claims on behalf of the government and to share in any recovery. Mr. Moore will receive $2 million as his share of the recovery. 21st Century Oncology has also agreed to enter into a five-year Corporate Integrity Agreement (CIA) with the Office of Inspector General of the United States Department of Health and Human Services (HHS-OIG) as part of the settlement. The CIA obligates 21st Century to undertake certain compliance reforms and to hire an organization to conduct an independent review of its practices.

 


EmCare Inc. (EmCare) and Physician’s Alliance Ltd (PAL) Agree to Pay More than $33 Million to Resolve Stark Law Violations

The government has demonstrated once again that it will not tolerate physicians who make medical decision based solely on financial considerations. This was illustrated when the Department of Justice announced earlier this month that two physician’s groups – EmCare Inc. and Physician’s Alliance Ltd (PAL) – have agreed to pay $29.6 million to resolve allegations that from 2008 through 2012 the companies referred patients to hospitals owned by Health Management Associates (HMA) in exchange for remuneration. The companies are alleged to have recommended that patients be admitted to HMA-run hospitals on an inpatient basis when they should have been admitted on an outpatient basis only. Medicare pays three times as much for inpatient submissions as it does for outpatient care. As part of the scheme, HMA is alleged to have made certain bonus payments to EmCare Emergency Department (ED) physicians and tied EmCare’s retention of existing contracts to increased admissions of patients who came to the ED.

In a separate agreement, three PAL executives have agreed to resolve allegations that from 2009 until 2012, the company accepted illegal remuneration from HMA to refer patients to two HMA hospitals. Under the terms of the agreement, PAL and its executives will have to pay $4 million plus interest 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.”

Under the terms of the settlement, Envision Healthcare Corporation (Envision) has entered into a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General. EmCare is a subsidiary of Envision. This settlement is a direct result of the FBI’s dedication to hold companies accountable for their role in healthcare fraud and abuse, and it would not have been possible without the teamwork between FBI Atlanta, the FBI Headquarters’ Major Provider Response Team, DOJ, and our partners,” said FBI Assistant Director Stephen E. Richardson. “Since 2011, the FBI and our partners have returned over $1.25 billion to private and public healthcare programs from these “whistleblower” investigations. The FBI is committed to safeguarding the public’s trust in a health care system that places patient care, not financial gain, as their primary focus.”

The EmCare settlement was reached as a result of a qui tam lawsuit which was filed by Drs. Thomas Mason and Stephen Folstad. Under the qui tam provisions of the False Claims Act private individuals are able to sue on behalf of the government for false claims and to share in any recovery. Drs. Mason and Folstad will receive more than $6 million. In a separate action, two former HMA executives filed suit in court alleging that a scheme between PAL and HMA existed. The two executives’ share of the settlement has not been determined.


Nationwide Pharmacy to Pay $63.7 Million to Settle Alleged Medicare Fraud

The government’s efforts at combating healthcare fraud often serve to maintain the very integrity of programs such as Medicare, Medicaid, etc. A breach in Medicare was corrected last week when the Justice Department announced that DaVita Rx – a nationwide pharmacy based in Coppell, Texas – has agreed to pay $63.7 million to resolve claims related to improper billing practices and unlawful financial inducements to healthcare program beneficiaries. The Texas based pharmacy specializes in serving patients with severe kidney disease. DaVita is alleged to have billed federal healthcare programs for prescription medications that were not shipped, that were shipped and later returned and that were shipped without the proper documentation. DaVita is also alleged to have paid financial inducements to Federal healthcare program beneficiaries. This is a violation of the Anti-Kickback Statute (42 U.S.C. § 1320a-7b). The nature of the kickback allegations are that DaVita accepted manufacturer copayment discount cards in lieu of collecting copayments from Medicare beneficiaries. DaVita is also said to have written off unpaid beneficiary debt and extended discounts to beneficiaries who paid for their medications using their credit card. The allegations came about as a result of self-disclosures by DaVita Rx and a whistleblower lawsuit.

“Improper billing practices and unlawful financial inducements to health program beneficiaries can drive up our nation’s health care costs,” said Civil Division Acting Assistant Attorney General Chad Readler. “The settlement announced today reflects not only our commitment to protect the integrity of the healthcare system, but also our willingness to work with providers who review their own practices and make appropriate self-disclosures.” According to the government, DaVita has already repaid approximately $22.2 million to federal healthcare programs following its self-disclosure and is slated to pay an additional $38.3 million as part of the settlement agreement. Additionally, $3.2 million has been allocated to cover Medicare program claims by states who may chose to participate in the settlement. “Providers should not make patient care decisions based upon improper financial incentives or encourage their patients to do the same,” said U.S. Attorney Erin Nealy Cox for the Northern District of Texas. “The U.S. Attorney’s Office has and will continue to work cooperatively with providers that bring such issues to light to redress the losses the federal healthcare system has incurred.”

The settlement came about as the result of a suit that was filed by two former DaVita Rx employees, Patsy Gallian and Monique Jones, under the qui tam, or whistleblower, provisions of the False Claims Act. These provisions permit private individuals to sue on behalf of the federal government and to share in any recovery. The whistleblowers in this case will receive approximately $2.1 million from the federal recovery. The settlement of this case illustrates the government’s ongoing efforts at combating healthcare fraud. One tool it uses is the False Claims Act and the whistleblower provisions of that act. The Department of Health and Human Services offers several programs for health care providers to self-report potential fraud.


Michigan Healthcare Agency Owner Convicted in $1.6 Million Healthcare Fraud Scheme

Unfortunately, for those who seek to defraud the government’s healthcare programs for the poor and elderly, the government arsenal includes more than settlements and Corporation Integrity Agreements. This was shown earlier this week when a federal jury in Detroit found the owner of Anointed Care Services, a Detroit area home health care agency, guilty for her role in a $1.6 million scheme to defraud Medicare by filing false claims. The jury further found the owner – Editha Manzano, 69, of Troy, Michigan – guilty of procuring home health services through the use of kickbacks and of providing patients with medically unnecessary treatments. Specifically, Manzano was convicted of one count of conspiracy to commit health care and wire fraud, one count of conspiracy to pay and receive kickbacks and one count of health care fraud. Sentencing in the case has been scheduled for April 19, 2018 in the Eastern District of Michigan. The judge who presided over the trial – U.S. District Judge Gershwin Drain – is also scheduled to sentence Manzano.

 

According to the evidence present at trial, Manzano and her co-conspirators engaged in a $1.6 million scheme to defraud Medicare for home health care services. This scheme took place from 2013 to 2016 and was in connection with Manzano’s business Anointed Care Services (Anointed). The evidence showed that Manzano paid illegal kickbacks for patients to sign up for home health services with her company. Further evidence showed that Manzano also conspired with several physicians to admit patients for home health care who did not qualify for such services. Lastly, evidence also showed that Manzano and her co-conspirators falsified medical records in order to support these actions.

 

Five defendants in total were charged in this case. Liberty Jaramillo, 67, of Troy, Michigan, pleaded guilty in June 2017 and is awaiting sentencing. Dr. Roberto Quizon, 71, of Bloomfield Hills, Michigan, pleaded guilty in June of 2017 and is awaiting sentencing. Additionally, Dr. Victoria Gallardo-Navarra was acquitted after trial and Juan Yrorita pleaded guilty during trial and is awaiting sentencing. This conviction was made possible by the efforts of the Fraud Section which leads the Medicare Fraud Strike Force. Since 2007, The Department of Justice and HHS has been vigorously pursuing those who are believed to have defrauded Medicare and Medicaid. As a result of these efforts, the Medicare Strike Force has charged more than 3,500 defendants of fraud which has cost Medicare more than $12.5 billion.


Dallas-Based Hospital to Pay $7.5Million to Settle Kickback Allegations

Often it is the case that alleged violations of the False Claims Act are tied to alleged violations of the Anti-Kickback Statute as well. This was proven to be the case last week when the Justice Department announced that Pine Creek Medical Center LLC (“Pine Creek”) has agreed to pay $7.5 million to resolve allegations that it violated the False Claims Act by providing marketing services to physicians in exchange for surgical referrals. This, the government alleges, violates the Anti-kickback Statute. “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.”

The government alleged that between 2009 and 2014 Pine Creek engaged in an illegal kickback scheme whereby it delivered to hospitals marketing and/or advertised services in exchange for those physicians referring their patients to Pine Creek. Some of the patients were Medicare and TRICARE beneficiaries. Moreover, Pine Creek is alleged to have paid for advertisements on behalf of physicians in a number of local and regional publications. These advertisements were in the form of pay-per-click campaigns, billboards, website upgrades, brochures and business cards. All of this was allegedly done in an effort to induce physicians to refer their patients to the Pine Creek facility.

“The United States Attorney’s Office, in coordination with our partners at Main Justice and HHS-OIG, have and will continue to aggressively pursue those that violate the Anti-Kickback Statute, regardless of the nature or form that the kickback takes,” said Erin Nealy Cox, the U.S. Attorney for the Northern District of Texas. “We must hold individuals and entities responsible for improperly furthering their financial interests at the expense of the federal health care programs.” As part of the settlement with the government, Pine Creek has agreed to enter into a corporate integrity agreement (CIA) with the Department of Health and Human Services Office of Inspector General (HHS-OIG). Under the agreement, Pine Creek is obligated to undertake internal compliance reforms for the next five years.

“Hospitals that try to boost their profits by paying kickbacks to physicians will instead pay for their improper conduct,” said Special Agent in Charge C.J. Porter, Department of Health and Human Services, Office of Inspector General’s Dallas Region. “We will continue to investigate such illegal business arrangements that undermine impartial medical judgment.” The settlement resolves allegations that were originally brought about in a lawsuit filed by whistleblowers under the qui tam provisions of the False Claims Act. These provisions allow private parties to sue on behalf of the government for false claims and to share in any recovery. The whistleblowers, Suzanne Scott and Savannah Sogor, former employees of the Pine Creek’s marketing department, will receive $1,125,000.

 


Mississippi Skilled Nursing Facility and others Agree to Pay More than a Million Dollars to Settle Alleged False Claim Act Violations

False Claims Act LawyerAs the holidays approach, many of us will be visiting elderly relatives who reside in skilled nursing facilities. In November, the government gave the relatives of such residents some good news by going after substandard care that was alleged to be taking place in such a skilled nursing facility. This occurred just last week when the Department of Justice announced that the Hyperion Foundation, Julie Mittleider, Hyperion’s former President, AltaCare Corporation, Douglas Mittleider, AltaCare’s CEO, Long Term Care Services, Inc. and Sentry Healthcare Acquirors Inc. have agreed to pay the government a total of $1.25 million to resolve false claims violations to Medicare and the Mississippi Medicaid program. The charges involve grossly substandard care that was allegedly provided to residents at the Oxford Health and Rehabilitation nursing home in Lumberton, Mississippi from late 2005 through mid-2012. The nursing home was operated by AltaCare. “Residents of nursing homes are some of our most vulnerable citizens,” said Acting Assistant Attorney General Chad A. Readler, head of the Justice Department’s Civil Division.  “Nursing home operators who bill Medicare and Medicaid for providing their residents with grossly deficient services will be held accountable.”

The government alleged that from October 2005 to May 2012, Hyperion submitted false claims for grossly substandard care that among other things:

  • Failed to meet the nutritional needs of residents of its Lumberton SNF,
  • Failed to administer prescribed medications to its residents,
  • Over medicated residents
  • Failed to hire enough staff to care for residents
  • Diverted funds from Medicare and Medicaid to other entities affiliated with Douglas or Julie Mittleider leaving the skilled nursing facility (SNF) unable to provide for basic operations such as food, heating, pest control, etc.

“It’s troubling when a nursing home company and its executives accept Medicare and Medicaid money to care for vulnerable nursing home residents and provide grossly deficient care, as alleged in this case,” said Special Agent in Charge Derrick Jackson of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “We will continue to hold nursing homes accountable to ensure residents receive quality healthcare and are provided safe living conditions.” The settlement arises from a lawsuit filed by Academy Health Center, Inc. ACH is the owner and landlord of the Lumberton, Mississippi SNF. Moreover, the lawsuit was filed under the qui tam provisions of the False Claims Act. These provisions permit private parties to sue for false claims and share in any subsequent recovery. The amount to be recovered by the private whistleblowers in this case has yet to be determined.

The government’s complaint in this matter is part of its ongoing campaign to combat health care fraud. One of the most powerful tools in this effort is the False Claims Act.


Pharmaceutical Company Agrees to pay More than $7.55 Million to Resolve Alleged False Claims Act Violations

While the nation’s growing opioid crisis is more than a little disheartening, it is somewhat encouraging to see the government take action against companies that are alleged to have knowingly contributed to the problem. Such was the case back in September of this year when the Department of Justice announced that pharmaceutical company Galena Biopharma Inc. (Galena) had agreed to pay $7.55 million to resolve allegations that it paid kickbacks to doctors to induce them to prescribe Abstral. Abstral is a fentanyl-based opioid that is used to treat “breakthrough” cancer pain that is not controlled by other medicines. “Given the dangers associated with opioids such as Abstral, it is imperative that prescriptions be based on a patient’s medical need rather than a doctor’s financial interests,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “The Department of Justice intends to vigorously pursue those who offer and receive illegal inducements that undermine the integrity of government health care programs.” Among the many allegations that the government leveled at Galena is that it:

  • Paid kickbacks to doctors in order to induce them to prescribe their drug Astral. Galena is alleged to have offered the following incentives:
  • Gave free meals to doctors and staff
  • Paid doctors of $5,000 and speakers $6,000 plus expenses to attend a Galena sponsored “advisory board”
  • Paid approximately $92,000 to a physician owned pharmacy to induce owners to prescribe the opioid.

Additionally, the government alleges that Galena paid doctors to refer patients to the company’s RELIEF patient registry study with the aim of inducing doctors to prescribe Abstral. Two of the doctors who benefited from the kickback scheme were tried, convicted and later sentenced to prison in the U.S. District Court for the Southern District of Alabama. The settlement arose from a lawsuit that was initially filled by Lynne Dougherty under the whistleblower or qui tam provisions of the False Claims Act. These provisions permit private parties to file a suit on behalf of the United States and obtain a portion of the government’s recovery. Ms. Dougherty received more than $1.2 million as part of the settlement reach back in September.

 


Chemed Corp. and Vitas Hospice Services Agree to Pay $75 Million to Resolve Alleged False Claims Violations

One unfortunate theme we see revisited in the government’s efforts to cut down on Medicare fraud and abuse is when companies are alleged to have exploited the system at the expense of the terminally ill. Such was the case late last month when the government announced that Chemed Corporation, its various subsidiaries, Vitas Hospice Services and Vitas Healthcare Corporation have agreed to pay $75 million to resolve allegations that they violated the False Claims Act by submitting false claims for hospice services to Medicare. “Today’s resolution represents the largest amount ever recovered under the False Claims Act from a provider of hospice services,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Medicare’s hospice benefit provides critical services to some of the most vulnerable Medicare patients, and the 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.” Chemed acquired Vitas in 2004.

The settlement reached last month resolves allegations that between 2002 and 2013 Vitas knowingly submitted false hospice claims to Medicare for patients who were not terminally ill. Medicare’s hospice benefits are available for patients who elect palliative treatment (care that is focused on relieving a patient’s stress and pain rather than curing a terminal illness). The government alleges that since the claims Vitas submitted were for patients who were not terminally ill, they did not qualify for benefits under Medicare. Moreover, the government alleged that the defendants rewarded its employees with bonuses for the number of patients who received hospice services as an incentive.

The settlement also resolves allegations that between 2002 and 2013, Vitas knowingly submitted false claims to Medicare for continuous home care services that were also not necessary. According to the government’s complaint, the defendants used aggressive marketing tactics and pressured staff to increase the volume of continuous home care claims regardless of whether or not patients required this type of care. Medicare’s hospice benefits reimburse providers for four different levels of care including continuous home care services. Continuous home care service is for patients who are experiencing acute symptoms causing a brief period of crisis. The reimbursement rate for continuous home care services is the high daily rate that Medicare pays.

Steve Hanson, Special Agent in Charge, for the U.S. Department of Health and Human Services, Office of Inspector General, Kansas City Region, has stated, “Healthcare providers who knowingly overbill our programs simply to increase their profits need to be put on notice that such conduct will not be tolerated, and we will pursue any and all remedies at our disposal to protect the tax payer and the Medicare and Medicaid programs.” Vitas Healthcare Corporation has entered into a five-year Corporate Integrity Agreement (CIA) with the HHS Office of the Inspector as part of the settlement reached last month. The settlement reached in this case resolves three lawsuits filed under the whistleblower provisions of the FCA. This provision of the False Claims Act permits private parties to file suit on behalf of the United States for false claims and to share in a portion of the recovery. The amount to be paid to the whistleblowers in this case has yet to be determined.


False Claims Act – Contractors and Two Owners in Western New York Agree to Pay More than $3 Million to Settle Allegations

The federal government has demonstrated again that it is especially vigilant when it comes to protecting people who have served in the country’s armed forces and have been injured as a result of having done so. This was demonstrated earlier this month when the Justice Department announced that New York-based contractors, Zoladz Construction Company Inc. (ZCCI), Arsenal Contracting LLC (Arsenal), and Alliance Contracting LLC (Alliance), along with two owners, have agreed to pay more than $3 million to settle allegation that they violated the False Claims Act. The government accuses the companies and their owners of improperly obtaining contracts that were designed as set asides for service-disabled veteran-owned businesses. “Contracts are set aside for service-disabled veteran-owned small businesses so to afford veterans with service-connected disabilities the opportunity to participate in federal contracting and gain valuable experience to help them compete for future economic opportunities,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Every time an ineligible contractor knowingly pursues and obtains such set-aside contracts, they are cheating American taxpayers at the expense of service-disabled veterans.”

 

In order to qualify as a SDVO small business, a service-disabled veteran must own and control the company. The United States alleges that Zoladz recruited a service-disabled veteran to control a sham company that Arsenal created. Moreover, the government alleges that neither Alliance nor ZCCI were eligible to participate in the SDVO small business contracting programs. Finally, Zoladz and Lyons are alleged to have carried out their scheme by making false statement to the U.S. Department of Veterans’ Affairs (VA) regarding Arsenal’s eligibility to participate in the SDVO small business contracting program.

 

“Detecting and discontinuing fraud, waste, and abuse committed by those who do business with the government remains a core function performed in this Office,” said Acting U.S. Attorney James P. Kennedy, Jr. for the Western District of New York. “That function, however, takes on additional significance when the target of the fraud is a program designed for the benefit of the heroes among us—our disabled veterans. Although this investigation did not uncover sufficient evidence to establish criminal liability by these entities and individuals, the multi-million dollar civil judgment ensures that those involved pay a heavy price for their decision to divert to themselves resources intended for the benefit of those who have made supreme sacrifices on behalf of all.”

 

The settlement reached in this case was filed under the whistleblower provisions of the False Claims Act. These provisions permit private individuals to sue on behalf of the federal government for false claims and to share in any recovery. The whistleblower involved in this case is scheduled to receive $450,000. The case is captioned under United States ex rel. Western New York Foundation for Fair Contracting, Inc. v. Arsenal Contracting, LLC, et al., Case No. 11-CV-0821(S) (W.D.N.Y.).


Medicare Fraud – Doctor Pleads Guilty to Role in Multi-million dollar Detroit Area Scheme

In spite of the government’s ongoing efforts at cracking down on Medicare fraud and Medicaid abuse, some individuals continue to consider profit over patient health. This is the case as the Justice Department announced earlier this month that a Detroit area physician – Abdul Haq, 72, of Ypsilanti, Michigan – pleaded guilty for his role in a conspiracy to defraud Medicare of approximately $19 million. Sentencing has been scheduled for May 29, 2018 before U.S. District Judge Denise Page Hood of the Eastern District of Michigan. Haq – as part of his guilty plea – admitted that he conspired with the owner of the Tri-County Network to prescribe medically unnecessary controlled substances to Medicare beneficiaries. Many of these beneficiaries were addicted to narcotics. Haq also admitted that he along with Tri-County Network owner, Mashiyat Rashid, required Medicare beneficiaries to undergo unnecessary joint injections if the beneficiary wished to obtain prescriptions for controlled substances.

The Department of Justice further accuses Haq of:

  • Unnecessarily referring his patients to specific third party home health agencies, laboratories and diagnostic providers.
  • Serving as a straw owner of various pain clinics controlled by Rashid
  • Submitting false and fraudulent enrollment materials to Medicare
  • Failing to disclose Rashid’s ownership interest in various medical clinics

The actions that Haq has admitted to have been estimated to have caused Medicare approximately $19,322,846.60 in false and fraudulent claims. This case was investigated by the FBI, HHS-OIG and IRS-CI. Trial Attorney Jacob Foster of the Criminal Division’s Fraud Section is prosecuting the case. The Fraud Section is part of the Medicare Fraud Strike force. Since it began back in March 2007, the Strike force has charged over 3,500 defendants who collectively have falsely billed the Medicare program for over $12.5 billion.