Pharmaceutical Company Agrees to Pay $625 Million to Resolve Allegations that it engaged in a Fraudulent Prescription Drug Scheme
Placing profit over patient need is a surefire way to incur the righteous wrath of the US government. One company witnessed this earlier this week, when the Department of Justice announced that AmerisourceBergen Corporation (ABC) and several of its subsidiaries have agreed to pay $625 million to resolve allegations that it improperly repacked and distributed oncology drugs to physicians treating cancer patients. ABC is a wholesale drug company that currently ranks number 11 on the Fortune 500 list. The drugs involved in ABC’s alleged repacking and distribution scheme are were Procrit®, Aloxi®, Kytril® and its generic form Granisetron, Anzemet® and Neupogen.® The settlement ABC agreed to pay resolves the company’s civil liability to the United States under the False Claims Act.
“The $885 million combined civil and criminal resolution with ABC underscores our determination to utilize all tools at our disposal to pursue illicit schemes that seek to profit from circumvention of important safeguards designed to protect the nation’s drug supply,” said Assistant Attorney General Joseph H. Hunt of the Department of Justice’s Civil Division. “We will continue to be particularly vigilant where these schemes put the health and safety of vulnerable patients at risk.”
The government alleged that ABC engaged in a prescription fraud scheme when its facilities improperly repackaged oncology-supportive injectable drugs into pre-filled syringes. Further, the United States contends that ABC’s facilities operated as a repackaging operation that shipped millions of these drugs to physicians to be used on their cancer-stricken patients. Moreover, the government alleges that the drugs ABC distributed through its facilities was prepared under non-sterile conditions and that the company did not submit documentation to ensure that their medications were safely packaged.
Finally, ABC is also alleged to have been involved in kickback scheme involving physicians who prescribed its Procrit® drug and that it re-billed the government for several of its medications. As a result of these activities, ABC is scheduled to pay $581,809,006 plus accrued interest to the federal government and $43,190,994 plus accrued interest to state Medicaid programs.
“Drug companies such as ABC that seek to boost profits at the expense of cancer patients unnecessarily put the health and safety of this vulnerable population at risk,” stated HHS-OIG Special Agent-in-Charge Lampert. “Greed must never be a part of medical decision making. HHS-OIG, along with our law enforcement partners, is committed to protecting patient quality of care, and this settlement should serve as a warning to drug companies that are tempted to shortchange patient well-being.”
The settlement reach earlier this week between ABC and the United Sates resolves allegations that arose from three separate qui tam or whistleblower actions. Under the False Claims Act, private parties may sue on behalf of the government for false claims and share in any recovery. Individuals who wish to do so can engage the services of a whistleblower law firm. A qui tam lawyer is knowledgeable in all areas of the False Claims Act. The whistleblowers in this case will share $93,089,441.
Hospital Agrees to Pay $260 Million to Resolve False Billing and Kickback Allegations
The government, it seems, is constantly untangling schemes it alleges defrauds its programs and breaches the public’s trust in its healthcare providers. This is what it claims happened earlier this week when the Department of Justice announced that Florida-based Health Management Associates, LLC (HMA), has agreed to pay more than $260 million to resolve criminal charges and civil claims that it engaged in a scheme to defraud the government. The government says it did so when it paid remunerations to physicians for patient referrals, submitted inflated claims for emergency department fees and knowing billed patients for inpatient services when outpatient or observation services were provided. These practices, the government says, violated the federal Anti-Kickback Statute (42 U.S. Code § 1320a–7b) as well as the False Claims Act. Several state and federal agencies including the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) made the joint announcement.
Currently, HMA has been operating under a Corporate Integrity Agreement (CIA) between Community Health Systems Inc. – its former owner – and the HHS-OIG. The conduct HMA is accused of having engaged in occurred after January 2014. As part of the criminal resolution, HMA has also entered into a three-year Non-Prosecution Agreement (NPA) with the Criminal Division’s Fraud Section. Under the terms of the NPA, HMS and CHS must cooperate with the investigation, report allegations and/or evidence of violations of Federal law and comply with the CIA it entered into. In addition to the settlement agreement HMA accepted, Carlisle HMA, LLC – a subsidiary – has agreed to plead guilty to one count of conspiracy to commit health care fraud. (Formerly, Carlisle HMA, LLC owned and operated Carlisle Regional Medical Center.)
“By manipulating patient status, HMA increased Medicare costs and pocketed taxpayer funds to which it was not entitled,” said U.S. Attorney Peeler. “Our Medicare patients and our taxpayers deserve better, and I am proud that justice has been done. Nonetheless, we will continue to pursue those hospitals in our district that would seek to take advantage of the Medicare Program.”
“Our office will continue to enforce prohibitions on improper financial relationships between health care providers and their referral sources, as these relationships can serve to corrupt physician judgment about a patient’s true health needs,” said U.S. Attorney Fajardo Orshan. “We will devote all necessary resources to ensure that those rendering medical care do so for the sole benefit of the patient and in compliance with the law.”
As a part of the settlement, HMA has agreed to pay $216 million to resolve charges that it submitted false claims between 2008 and 201 as part of a corporate-wide scheme to increase patient admissions of Medicare, Medicaid and TRICARE beneficiaries. The government alleged that HMA did so without medical necessity and that services could have been done in a more cost efficient manner. The breakdown goes as such: HMA will pay $61,839,718 to the US government and $706,084 to participating states. The civil settlement in this case resolves allegations that during the period from 2003 through 2011, two of HMA’s hospitals referred patients to doctors with whom they had a monetary relationship with in violation of the Anti-Kickback Statute. For this, HMA has agreed to pay the United States $87.96 million and the State of Florida $5.54 million. The Anti-Kickback Statute and the Stark Law, prohibits hospitals from providing financial inducements to physicians for referrals.
“Billing for unnecessary hospital stays wastes federal dollars,” said Assistant Attorney General Hunt. “In addition, offering financial incentives to physicians in return for patient referrals undermines the integrity of our health care system. Patients deserve the unfettered, independent judgment of their health care professionals.”
The allegations resolved by the settlement were brought about in eight lawsuits filed under the qui tam or whistleblower, provisions of the False Claims Act. This act permits private parties to sue on behalf of the government for false claims and to receive a portion of any recovery. Plaintiffs who do so usually engage the services of a qui tam Medicare lawyer. A qui tam attorney is knowledgeable in all areas of the False Claims Act.
Healthcare Provider Agrees to Settle False Claims Act Allegations Regarding Kickbacks it Reportedly Made to Nursing Homes and to Physicians
Kickbacks and illegal inducements offered to and received from healthcare providers sometimes take the form of cash payments but they just as often involve free services. Thus, the anti-kickback statues were designed to deal with both forms of illegal incentives. Hence, it was late last month that the Department of Justice announced that Reliant Rehabilitation Holdings Inc. (Reliant) has agreed to pay the United States $6.1 million to resolve allegations that it violated the False Claims Act (FCA), 31 U.S.C. §3729, et seq., by paying kickbacks to skilled nursing facilities (SNFs) in connection with its services. (Reliant nationally provides rehabilitation services for the infirmed and elderly and is based in Plano, Texas.)
The United States alleged that between April 2013 and May 2017, Reliant knowing offered inducements in the form of their nurse practitioners working for facilities it wanted to do businesses with. Moreover, Reliant is alleged to have offered these services below their fair market value as an added enticement for these SNFs to contract out with it. “The Justice Department is committed to investigating and routing out any improper financial relationships between health care providers that have the potential to undermine patient care and trust.” said Acting Assistant Attorney General Chad A. Readler for the Justice Department’s Civil Division. “This settlement demonstrates our commitment to protecting the integrity of the Medicare program.”
“Paying illegal remuneration to nursing homes and doctors to increase the bottom line – as contended by the government in this case – is unacceptable as it too often sacrifices the best interests of patients to profit-making schemes,” said CJ Porter, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “Patients and taxpayers deserve better.”
The allegations resolved by this agreement originated from a lawsuit filed by Dr. Thomas Prose under the qui tam, or whistleblower, provisions of the False Claims Act. This act, which has been an invaluable tool in government’s efforts to prosecute healthcare fraud, permits private citizens to file suit against companies and individuals for false claims. Plaintiffs can then share in the proceeds arising from any settlement. Often, plaintiffs engage the services of a whistleblower Medicare attorney or qui tam lawyer in this effort. Dr. Prose will receive somewhere in the neighborhood of $900,000 as his share of the settlement.
The Justice Department Files Complaints against Two Ohio Doctors in Precedence Setting Case Involving Opioid Prescription Abuse
It’s a bitter irony that doctors, who are charged with helping to alleviate the nation’s opioid problem, are sometimes responsible for making that problem worse. The government alleges that this is what happened when late last month the Justice Department filed a first-of-its-kind complaint against two Ohio-area doctors after it was revealed that the physicians had needlessly distributed pain killers and other drugs to their patients. The doctors – Michael P. Tricaso, D.O., of Akron, and Gregory J. Gerber, M.D., of Sandusky – have been charged under the Controlled Substances Act (CSA) and are now forbidden from writing prescriptions of any kinds. Earlier this year, President Trump announced the Initiative to Stop Opioid Abuse and Reduce Drug Supply and Demand. This act seeks to address the nation’s growing opioid problem by addressing it at the prescription level.
From this Initiative has arisen the Prescription Interdiction & Litigation (PIL) Task Force which aggressively deploys and coordinates all available criminal and civil law enforcement tools in order to stem the tide of opioid addiction. “These doctors were simply drug dealers in white lab coats,” said U.S. Attorney Justin Herdman. “They illegally prescribed painkillers and other drugs for no legitimate medical purpose. Putting so-called physicians like these out of business is one of several steps we are taking to turn the tide on the opioid and drug crisis that has caused so much death and heartbreak in our community.”
“Excessive prescribing and reckless distribution of opioids and other drugs have harmed our communities and fueled the public health crisis we are currently dealing with,” said Ohio Attorney General Mike DeWine. “At the Ohio Attorney General’s Office, we are committed to protecting Ohio families and collaborating with our law enforcement partners to ensure that those who ignore the law, put people at risk, and contribute to this crisis are held accountable for their actions.”
Tricaso operates the Better Living Clinic in Akron, Ohio. According to the complaint, Tricaso sold steroids and other controlled substances numerous times this year to an undercover DEA agent in a hotel parking lot. Gerber, it is alleged, promoted Subsys, a sublingual formulation of fentanyl spray used to treat cancer-related pain and in doing so received $175,000 from Insys Therapeutic, Inc. This, the government says, violated the False Claims Act’s prohibition against kickbacks. Gerber was himself the target of an undercover investigation that revealed his practice of illegally prescribing controlled substances such as Oxycodone, Dronabinol and Alprazolam. Both men are accused of violating the CSA. Gerber is also accused of violating the False Claims Act.
“These doctors pledged an oath dedicating their lives to treating patients but instead they traded that commitment for the pursuit of ill-gotten profits through the fraudulent prescribing of opioids,” said FBI Special Agent in Charge Stephen D. Anthony. “This case should serve as a warning to other physicians of the perils of engaging in such activities, law enforcement will continue collaborative efforts to hold individuals accountable.”
These cases were investigated by the Drug Enforcement Administration, the Federal Bureau of Investigation, Health and Human Services – Office of Inspector General, the Ohio Attorney General’s Medicaid Fraud Control Unit, and other state and governmental entities. The False Claims Act is another tool the government uses to ensure the integrity of the healthcare system. One tool the government uses to this end is the qui tam or whistleblower provisions of the False Claims Act. It permits private individuals to sue on behalf of the US and to share in any recovery. Plaintiffs usually do so through the services of a False Claims Act lawyer. Qui tam law firms handle all aspect of the False Claims Act.
Healthcare Provider Agrees to Pay More than $1 Million to Resolve False Claims Act Allegations
The government has long maintained that healthcare providers who perform unnecessary medical procedures on patients risk public safety and drain its programs of vital resources. That is why last month the Justice Department announced that Grenada Lakes Medical Center (GLMC), a hospital operated by the University of Mississippi Medical Center, agreed to pay more than $1.1 million to resolve allegations that the hospital sought and received funds from Medicare for services that were medically unnecessary. The settlement resolves allegation that from January 2005 to April 2013, the hospital submitted claims for Intensive Outpatient Psychotherapy (IOP) services. These services, the government alleged, did not qualify for Medicare reimbursement which the hospital sought. The IOP services were performed on GLMC’s behalf by Allegiance Health Management a healthcare management firm out of Shreveport, Louisiana.
“Hospitals that participate in the Medicare program are responsible for ensuring that the services performed at their facilities or on their behalf reflect the medical needs of patients rather than the desire to maximize profit,” said Acting Assistant Attorney General Chad A. Readler for the Civil Division. “The Department of Justice will continue to hold accountable those who misspend taxpayer funds by providing medically inappropriate services.” Last month’s settlement follows previous settlements with more than twenty other hospitals where Allegiance provided these kinds of services.
“We will not tolerate hospitals that place profit over legitimate patient care by billing for medically unnecessary services,” said C.J. Porter, Special Agent in Charge for the U.S. Department of Health and Human Services Office of Inspector General. “In coordination with our partners, we will continue to investigate these cases and ensure taxpayer funds are used as intended.”
The settlement reached with GLMC resolves allegations that originated from a lawsuit filed under the whistleblower or qui tam provisions of the False Claims Act. These provisions permit private individual to sue on behalf of the government and to share in any subsequent recovery. For this, defendants usually retain the services of whistleblower lawyers. A qui tam law firm is a firm that specializes in all aspects of the False Claims Act. The whistleblower in this case was Ryan Ladner a former program manager at the Inspirations Outpatient Counseling Center located at Wesley Medical Center in Hattiesburg, Mississippi. Mr. Ladner’s share of the recovery comes to $195,000. 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).
Houston-area Psychiatrist Sentenced to More than 12 Years for his part in a $155 Million Medicare Fraud Scheme
The government continues to dole out hefty fines and prison sentences to those who defraud its programs and the citizens they serve. This was demonstrated earlier this month when representatives from several agencies including the FBI, the U.S. Department of Health and Human Services-Office of Inspector General, the Internal Revenue Service, and others announced that a Houston-area psychiatrist has been convicted of participating in a $155 million scheme to defraud the Medicare program. The psychiatrist – Riyaz Mazcuri – was sentenced in the Southern District of Texas by U.S. District Judge Vanessa D. Gilmore. Mazcuri has been ordered by Judge Gilmore to pay $20,607,410.22 in restitution to Medicare and $2,250,789.69 in restitution to Medicaid. The formal charges against Mazcuri include conspiracy to commit health care fraud and health care fraud.
The evidence presented at trial showed that from 2006 until February 2012, Mazcuri and others engaged in a scheme to defraud Medicare by submitting false and fraudulent claims to Medicare costing the program $155 million. These claims were for its partial hospitalization program (PHP) services. PHP services are used to treat patients suffering from mental illness and substance abuse on an outpatient basis. That same evidence showed that Mazcuri and his confederates admitted patients into these intensive psychiatric programs when they did not qualify for participation in those programs by virtue of their incapacitation from Alzheimer’s and/or dementia. Evidence also showed that Mazcuri falsified records and signed documents to make it appear as if these patients did indeed qualify for participation in this program.
Mazcuri, the evidence further showed, billed Medicare for psychiatric treatments which he never provided. His signature on patient documents allowed Riverside General Hospital (Riverside) of Houston to bill Medicare for over $55 million of the total 155 million that it billed for psychiatric services. To date, 15 others have been convicted for their roles in this scheme to defraud Medicare and Medicaid. Several of the defendants have received prison sentences with one – Mohammad Khan – having received a sentence of 40 years in prison.
The convictions were made possible as a result of the ongoing efforts of the Medicare Fraud Strike Force. This is a joint initiative of the Department of Justice and HHS. The initiative seeks to prevent and deter fraud against Medicare, Medicaid and other government programs. The Strike Force operates in 10 areas across the country. Since its inception in March 2007 it has caused over 3,500 defendants to be charged with fraudulently billing Medicare and other programs and has recovered $12.5 billon. The government is often aided by citizens who report such incidences and are thus protected by whistleblower Medicare laws. People who do so are entitled to a share in the recovery the government makes in such cases and are able to retain a qui tam attorney in these efforts.
Ambulance Company Agrees to Pay More than $21 Million to Settle Unlawful Kickback Allegations
We have never ever seen the government’s crackdown on fraud and abuses in the healthcare system involve ambulance companies. Unfortunately, there is a first time for everything as last week the Justice Department announced that several ambulance industry defendants have agreed to pay more than $21 million to settle False Claims Act allegations involving violations of the Anti-Kickback Statute. These companies are alleged to have submitted false claims to Medicare and Medicaid. The Anti-Kickback Statute (2 U.S.C. § 1320a-7b) prohibits offering, paying, soliciting or receiving remuneration to induce referrals for services provided by federally funded programs such as Medicaid, Medicare or TRICARE. The statute’s intent is to ensure that the judgment of medical providers is not unduly influence by financial incentives and is based solely on medical need.
The settlement came about as the result of a lawsuit that was originally filed under the qui tam or whistleblower provisions of the False Claims Act. The Act permits private parties to file suit for false claims and to share in any recover that comes about as a result of that suit. Plaintiffs in these instances often engage the services of a whistleblower law firm. Whistleblower lawyers are knowledgeable in all aspects of the False Claims At. The whistleblower in this case was Dr. Stephen Dean who alleged that several healthcare providers, including East Texas Medical Center Regional Healthcare System, Inc. and East Texas Medical Center Regional Health Services, Inc. (together, “the ETMC Defendants”), and their affiliated ambulance company, Paramedics Plus, LLC (“Paramedics Plus”), were involved in a kickback scheme with several municipal entities in the state of Texas. Dr. Dean will receive over $4.9 million as his share of the settlements.
Prior to this agreement, the government settled with Alameda County and Pinellas Emergency Medical Services Authority (EMSA) – two municipal entities involved in the kickback scheme. Alameda County agreed to pay the government $50,000 and Pinellas EMSA agreed to pay it $66,000 plus an additional $5,200 to the State of Florida. The United States settled with the ETMC (East Texas Medical Center Regional Healthcare System, Inc. and East Texas Medical Center Regional Health Services, Inc) defendants and Paramedics Plus for $20.69 million and with EMSA for $300,000.
“Paramedics Plus paid millions of dollars in illegal inducements over the course of a number of years,” said U.S. Attorney Joseph D. Brown for the Eastern District of Texas. “Williamson allegedly received gifts and also directed Paramedics Plus to make political contributions to local Oklahoma politicians, which EMSA could not do on its own. Sophisticated health care companies do not simply give away millions of dollars to referral sources without expecting something in exchange. Quid pro quo arrangements for the referral of health care business are illegal.”
Healthcare Provider Specializing in Acute Car Agrees to pay $13 Million to Settle False Kickback and Stark Law Allegations
Oftentimes healthcare entities that are alleged to have defrauded the federal government are subject to equivalent state laws. This was certainly the case earlier this month when the Justice Department announced that Pennsylvania-based long-care and rehab provider Post Acute Medical, LLC and certain of its entities (collectively, “PAM”) have agreed to pay the US and the states of Texas and Louisiana a total of $13,168,000 to settle claims that they violated the False Claims Act by knowingly submitting claims to Medicare and Medicaid that resulted in violations of the Anti-Kickback Statute and the Physician Self-Referral Law (also known as the Stark Law). The Anti-Kickback Statute makes it a criminal act for healthcare provides to exchange (or offer to exchange), anything of value, in an effort to induce (or reward) the referral of federal health care program business. The Physician Self‑Referral Law, commonly known as the Stark Law, prohibits physicians from referring patients to a medical facility for which said physician has a financial interest, bet it ownership, investment, or structured compensation agreement. Both The Anti-Kickback Statute and the Physician Self-Referral Law were designed to ensure that the judgment of healthcare providers be based on patient need and not on any financial incentive.
Since it began more than a decade ago, PAM entered into physician-services contracts on behalf of its hospitals. It is the government’s contention that this was done in order to induce physicians to refer its patients to PAM’s facilities. This, the government alleges, violated the Anti-Kickback Statute by entering into “reciprocal referral relationship” with unaffiliated healthcare providers. “PAM’s alleged kickbacks and improper physician relationships threatened the impartiality of medical decision-making and the financial integrity of Medicare and Medicaid,” said Special Agent in Charge C.J. Porter for the U.S. Department of Health and Human Services Office of Inspector General. “Our agency will continue to investigate companies who step over the line to maximize their profits at the expense of federal health care programs.”
Under the terms of the settlement announced earlier this month, PAM will pay $13,031,502 to the United States, $114,016 to Texas, and $22,482 to Louisiana. (PAM’s actions are also alleged to have violated Texas and Louisiana’s false claims statutes.) A lawsuit filed by Douglas Johnson lead to this settlement. Mr. Johnson filed his whistleblower Medicare lawsuit under the qui tam provisions of the False Claims Act. This act allows private parties to sue for false claims on behalf of the government and to share in any recovery. Plaintiffs can then, if they choose, retain whistleblower lawyers to help them in their efforts. Mr. Johnson is slated to receive $2,345,670 as his share of the federal government’s recovery.
Finally, PAM has been made to enter into a five-year Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General. This CIA compels PAM to hire an Independent Review Organization to oversee its activities.
California-based Healthcare Provider and its CEO Agrees to Pay $65 Million to Settle False Claims Act Allegations
Healthcare providers who exaggerate patients’ need through “up-coding” harm to not only those patients but they also harm taxpayers. Thus, earlier this month the Justice Department announced that Prime Healthcare Services, Inc., Prime Healthcare Foundation, Inc., and Prime Healthcare Management, Inc. (collectively Prime), and Prime’s Founder and Chief Executive Officer, Dr. Prem Reddy, have agreed to collectively pay the US $65 million to settle allegations that 14 of their hospitals submitted false claims to Medicare. Specifically, they are alleged to have charged patients for much costlier procedures than what was required for their conditions. This practice is known as “up-coding”. According to the terms of the agreement, Dr. Reddy will pay $3,250,000 and Prime will pay $61,750,000.
“This settlement reflects our ongoing commitment to ensure that health care providers appropriately bill Medicare,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Charging the government for higher cost inpatient services that patients do not need, and for higher-paying diagnoses than the patients have, wastes the country’s valuable health care resources.”
The hospitals that are parties to the agreement include: Alvarado Hospital Medical Center, Garden Grove Medical Center, La Palma Intercommunity Hospital, Desert Valley Hospital, Chino Valley Medical Center, Paradise Valley Hospital, San Dimas Community Hospital, Shasta Regional Medical Center, West Anaheim Medical Center and Centinela Hospital Medical Center, Sherman Oaks Hospital, Montclair Hospital Medical Center, Huntington Beach Hospital and Encino Hospital Medical Center.
The government alleges that from 2006 through 2013, Prime increased the admissions of Medicare beneficiaries to 14 of its California hospitals via their Emergency Departments. The government maintains that the inpatient admission of these beneficiaries was medically unnecessary because their symptoms and treatments could have been managed with less costly treatments. It is significant to note here that hospitals generally receive higher payments from Medicare for inpatient treatments than for outpatient treatments. Thus, by admitting beneficiaries who did not need inpatient care, the government claims that Prime caused financial harm to the Medicare program. This month’s agreement also resolves allegation that from 2006 through 214, Prime engaged in up-coding and falsified documents concerning patient diagnoses with the purpose of increasing its reimbursement from Medicare.
“Patients and taxpayers who finance health care programs such as Medicare deserve to know that doctors are making decisions solely based on medical need – and not based on a corporate desire to increase billings,” said First Assistant United States Attorney Tracy Wilkison for the Central District of California. “The Justice Department is committed to preserving the integrity of public health programs and preventing improper billing practices.”
Under the terms of the settlement, Prime is required to enter into a Corporate Integrity Agreement (CIA) with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). The CIA requires Prime to engage in compliance efforts over the next five years by retaining an independent review organization. This organization will be tasked with reviewing the accuracy of the company’s claims to be sure that they comply with Medicare’s regulations.
The settlement resolves a lawsuit that was filed under the False Claims Act. Under the qui tam or whistleblower provisions of this act, private citizens are allowed to bring lawsuits on behalf of the US and to share in any recovery. Plaintiffs usually do so by retaining a qui tam lawyer from a qui tam law firm. The whistleblower in this case is slated to receive $17,225,000 as her portion of the settlement amount. 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).
Detroit Hospital Systems Agrees to Pay More than $84 Million to Settle False Claims Act Allegations
The integrity of the health care system is again at issue as the Justice Department takes another provider to task for allegedly offering financial incentives to physicians in return for patient referrals. This happened last week when William Beaumont Hospital, based in Detroit, agreed to pay $84.5 million to resolve allegations that the regional hospital system violated the False Claims Act by engaging in improper relationships with eight referring physicians. Further the hospital is alleged to have submitted these false claims to the Medicare, Medicaid and TRICARE programs for reimbursement. The Anti-Kickback Statute, which the hospital is accused of violating, prohibits health care providers from offering, paying, soliciting, or receiving remuneration for services provided by Medicaid, Medicare and other federally funded programs. The Physician Self-Referral Law, commonly known as the Stark Law, prohibits hospitals from billing Medicare for certain services referred by physicians with whom the hospital has an improper financial arrangement. This prohibition includes the payment of compensation that exceeds the fair market value of the service rendered. Both statutes are designed to ensure that a physician’s medical judgment is not impaired by financial incentives and are indeed based solely on the patient’s medical needs.
“We are very pleased with the outcome of this case. This result should impress on the medical community the fact that we will aggressively take action to recover monies wrongfully billed to Medicare, through the remedies provided in the federal False Claims Act,” said U.S. Attorney Matthew Schneider for the Eastern District of Michigan. “I would like to commend the new leadership at Beaumont Hospital for making things right once its past wrongdoing was brought to its attention by federal investigators.” The government alleges that between 2004 and 2012, Beaumont violated the Anti-Kickback Statute and the Stark Law by submitting claims for services provided by illegally referred patients. Specifically, the settlement reached last week resolves claims that Beaumont misrepresented that a CT radiology center was qualified as an outpatient department of Beaumont. As a result of the settlement, Beaumont is slated to play $82.74 million to the government and $1.76 million to the State of Michigan.
“Health care providers that offer or accept financial incentives in exchange for patient referrals undermine both the financial integrity of federal health care programs and the public’s trust in medical institutions,” said HHS-OIG Special Agent in Charge Lamont Pugh. “Our agency will continue to protect both patients and taxpayers by holding those who engage in fraudulent kickback schemes accountable.”As one of the terms of the settlement Beaumont, must enter into a five-year Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General. The agreement requires that Beaumont must consent to an arrangement review conducted by an Independent Review Organization.
The allegations resolved by this settlement were brought about in lawsuits filed under the qui tam, or whistleblower, provision of the false Claims Act. This act permits private parties to sue on behalf of the government for false claims and to share in any recovery. Suits of this nature are usually handled by a qui tam attorney working for a whistleblower law firm. The whistleblowers share to be awarded have not yet been determined as there were several plaintiffs involved in the action against Beaumont.