In The News

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.


The Manufacturer of two Medical Devices Agrees to Pay the Government $12.5 Million to Resolve False Claims Act Allegations

When companies misrepresent the capabilities of their medical devices to the public and to healthcare providers, lives are endangered. This is a situation that the government has once again refused to tolerate. Thus, the Justice Department announced last week that New York-based medical device manufacturer AngioDynamics, Inc., will pay  the US $12.5 million to settle claims that it caused healthcare providers to submit false claims to Medicare, Medicaid and other agencies for two of its medical devices – LC Bead and the Perforator Vein Ablation Kit (PVAK). “The Justice Department is committed to holding medical device manufacturers accountable, which includes requiring that they follow all laws designed to ensure that medical devices are safe and effective,” said Acting Assistant Attorney General Chad A. Readler for the Justice Department’s Civil Division. “When manufacturers make misleading statements concerning the use of their products in ways that have not been cleared by the FDA, it undermines patient care. Taxpayers and patients deserve better.”

AngioDynamics has agreed to pay the government $11.5 million to resolves allegations that it caused false claims to be submitted for two unapproved drug-delivery devices that were marketed using false and misleading promotional claims. The government alleged that this occurred from May 2006 through December 2011. During that period, AngioDynamics was the U.S. distributor for Biocompatibles, PLC – the manufacturer of LC Bead – and marketed LC Bead as a device that delivered drugs in combination with chemotherapy treatments. Furthermore, AngioDynamics personnel are alleged to have claimed that LC Bead was “better”, “superior”, “safer”, and “less toxic” than alternative treatments. The FDA had earlier declined a request by the company to make such claims. Next, the government alleged that AngioDynamics instructed healthcare providers to get around the refusal of certain insurers to provide coverage for certain LC Bead procedures by instructing these providers to use inaccurate billing codes when submitting claims.

AngioDynamics is also slated to separately pay $1 million to resolve claims that it also caused false claims to be submitted for PVAK, another of its medical devices. The device – which AngioDynamics acquired along with other medical devices – uses lasers to collapse malfunctioning veins. AngioDynamics requested that the FDA approve the use of the device in treating perforator veins but when the agency approved the PVAK for the treatment of superficial veins only, AngioDynamics rebranded the device and continued to market it for the treatment of perforator veins. This is despite a recall of the device. The government alleges that this falsely represented to providers that Medicare would cover the use of this unapproved device.

“Medical device makers have an obligation to provide truthful information to protect both patients and the integrity of government health programs,” said Special Agent in Charge Scott J. Lampert of the U.S. Health and Human Services Department Office of Inspector General. “We will continue to thoroughly investigate health care fraud allegations.”

This civil settlement arose from a lawsuit that was filed under the Whistleblower or qui tam provisions, of the False Claims Act. The Act permits private parties to file suit on behalf of the United States for false claims and share in a portion of the government’s recovery. Plaintiffs usually retain the services of a false claims act lawyer in these cases. Whistleblower lawyers are knowledgeable in all areas of the False Claims Act and its provisions. Mr. Ryan Bliss, who formerly worked in the marketing departments of both AngioDynamics and Biocompatibles, filed the suit and will receive $2.3 million dollars as his share of the recovery. The federal share of the civil settlement is approximately $10.9 million; the state Medicaid share is approximately $600,000.


Two Healthcare Providers Agree to Pay More than $14 Million to Resolve False Claims Act Allegations

In addition to maintaining the integrity of its health care programs, the US government has made it clear that it will continue to pursue companies that improperly siphon money away from its programs. Thus, the Department of Justice announced this week that Health Quest Systems, Inc. and two of its subsidiaries (Health Quest) and Putnam Health Center (PHC), have agreed to pay $14.7 million to resolve allegations that the healthcare providers violated the False Claims Act when they knowingly submitted ineligible claims for reimbursement. Health Quest is a network of hospitals and health care provider that deliver surgical, medical and home health services. PHC is its New York-based subsidiary.

“This resolution is a testament to our deep commitment to protecting the integrity of federally- funded healthcare programs,” said Acting Assistant Attorney General Chad A. Readler for the Justice Department’s Civil Division. “We are determined to hold accountable healthcare providers that knowingly claim taxpayer funds to which they are not entitled.” In the settlement that was reached earlier this week, Health Quest and PHC admitted that from April 1, 2009 through June 23, 2015 they knowingly submitted claims that were billed at two levels higher than supported by their documentation. Additionally, Health Quest admitted that from April 1, 2011 through August 2014, they submitted claims for home health services that lacked the required documentation. This included their failure to document face-to-face physician encounters.

From March 1, 2014 through December 31, 2014, the government alleges that Health Quest subsidiary hospital, PHC submitted false claims from two orthopedic physicians who had a direct financial relationship with PHC in violation of the Physician Self-Referral Law (42 U.S. Code § 1395nn). The government alleged that the physicians were compensated in excess of the fair market value for their services. This violates the Self-Referral Law which prohibits, among other things, hospitals from billing Medicare for certain services referred by physicians with whom the hospital has an improper compensation agreement. Finally, the government alleges that the purpose of the excessive compensation that the physicians received was to induce referrals to PHC. This violates the Anti-Kickback Statute (42 U.S.C. § 1320a-7b) as well.

“Today’s settlement holds Heath Quest responsible for false billings to federally funded health care programs, as well as claims tainted by a hospital’s payments to two physicians for administrative services where it appears that one purpose of those payments was to improperly induce referrals. Hospitals and providers must be vigilant to make sure that claims accurately reflect medical services provided and are supported by sufficient documentation. We will continue to investigate whistleblower complaints vigorously to protect public funds,” said United States Attorney Grant C. Jaquith for the Northern District of New York.

In addition to the settlement reached earlier this week, Health Quest is required to enter into a Corporate Integrity Agreement (CIA) with HHS-OIG and to pay the State of New York $895,427 which jointly funds the State’s Medicaid program with the federal government. The settlement resolves three separate lawsuits that were filed by former Health Quest employees under the qui tam, or whistleblower, provisions of the False Claims Act. The Act permits private individuals to sue for false claims and to share in any potential recovery. Usually, plaintiffs engage the services of a qui tam law firm to handle such matters. A qui tam attorney deals in all areas of the False Claims Act and its provisions. The four plaintiffs in this matter will collectively receive $2,824,904.


Healthcare Provider Agrees to Pay $8.5 Million to Settle False Claims Act Allegations

A recurring theme in the government’s efforts to crack down on fraud and abuse, is companies who either out of intent or carelessness, fail to establish audits that can detect over payments from Medicare and other agencies. This was proven to be true when late last month, the Justice Department announced that Caris Healthcare, LP and its subsidiary, Caris Healthcare, LLC., have agreed to resolve allegations that the companies violated the False Claims Act when they submitted false claims, overcharged patients and improperly referred patients for hospice benefits who were not terminally ill. Caris Healthcare operates in Tennessee, Virginia and South Carolina. The government complaint alleged that Caris continued to submit hospice claims for patients even after concerns were raised by its Chief Medical Office and nurse employees who actually examined the patients in question. Moreover, the government also alleged that Caris took no action to determine whether it had received improper payments in the past that should have been returned to Medicare. Finally, the government alleged that Caris engaged in these behaviors in order to meet aggressive admissions and census targets that it set for itself.

“Today’s settlement is an important reminder that compliance programs and activities cannot exist in name only. When a healthcare provider is put on notice that a patient is ineligible for a particular Medicare benefit or service, the healthcare provider cannot turn a blind eye to that information but, instead, must take reasonable steps to stop the improper conduct and to determine whether that conduct resulted in prior over payments,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Moreover, when internal audit results or other information reveals the existence of a compliance issue that is not limited to a particular claim, as was the case here, it is incumbent on providers to exercise due diligence to determine how widespread the problem is and to return any over payments.”

“It is completely unacceptable for providers to retain over payments from Medicare after being put on notice of the likelihood of such over payments. Under the law, providers must go beyond merely conducting audits and providing forums for employee concerns. Rather, when Medicare rule violations have been revealed, the provider must take meaningful action to correct them, including repaying Medicare for funds they improperly received. Such corrective actions are vital to the integrity of the Medicare program, and the U.S. Attorney’s Office will continue to use the resources available to it to ensure the government is properly reimbursed for funds it is owed,” said J. Douglas Overbey, U.S. Attorney for the Eastern District of Tennessee.

The settlement resolves allegations that originated from a lawsuit filed by Barbara Hinkle. Hinkle is a registered nurse who formerly worked for Caris Healthcare. Hinkle filed her suit under the qui tam, or whistleblower, provisions of the False Claims Act. This act permits private individuals to sue on behalf of the government, with or without the aid of a False Claims Act attorney, for false claims and to share in any recovery. A whistleblower law firm employs experts who are knowledgeable in all areas of the False Claims Act.


Health Care Management Company Agrees to Pay up to $22.51 Million to Settle False Claim Act and Improper Billing Allegations

The US government has once again sent a strong message to companies that it alleges have sought to place profit over patient welfare. This was proven last week when the Justice Department announced that Healogics, Inc. has agreed to pay up to $22.51 million to settle allegations that it violated the False Claims Act and that it billed Medicare for services to patients that were medically unnecessary and unreasonable. Healogics is a Florida-based hospital that owns wound care centers around the nation. The services that the government alleges that Healogics improperly billed for were for hyperbaric oxygen (“HBO”) therapy.

“Medicare beneficiaries are entitled to care based on their clinical needs and not the financial goals of healthcare providers,” said Acting Assistant Attorney General Chad A. Readler for the Justice Department’s Civil Division. “All providers of taxpayer-funded federal healthcare services, whether contractors or direct billers, will be held accountable when their actions knowingly cause false claims for medically unnecessary services to be submitted.”

HBO therapy is a process in which the entire body is exposed to oxygen under increasing pressure as an adjunctive therapy to treating chronic wounds. The settlement announced last week resolves allegations that from 2010 through 2015, Healogics knowingly submitted false claims to Medicare for HBO therapy that was either unnecessary or unreasonable. “Civil healthcare fraud enforcement has always been a core part of the mission of our office,” said United States Attorney Maria Chapa Lopez for the Middle District of Florida. “With this settlement, our Civil Division confirms its commitment to our nation’s critical struggle against practices that put public health programs at risk.”

In addition to the settlement Healogics has agreed to, the company will also have to enter into a five-year Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General. The CIA requires that Healogics submit itself to a claims and systems review process that must be conducted by an Independent Review Organization. “When greed is the primary factor in performing medically unnecessary health care procedures on Medicare beneficiaries, both patient well-being and taxpayer funds are compromised,” said Special Agent in Charge Shimon R. Richmond of HHS OIG. “We will continue to thoroughly investigate health care companies that engage in such fraudulent schemes.”

The allegations that were resolved by this settlement came from a lawsuit that was filed by James Wilcox. Wilcox is a former Director for Research and Quality for Medical Affairs at Healogics. A separate lawsuit was also filed by two doctors and a former program director who worked at Healogics-affiliated wound care centers. The lawsuits were filed 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. People who do so usually retain a qui tam Medicare attorney for this purpose. Whistleblower lawyers are knowledgeable in all aspects of the False Claims Act and its provisions. The settlement provides for a whistleblower share of up to $4,276,900.