In The News

Medco to Pay $7.9 Million to Resolve Kickback Allegations

Medicare fraud cases come in many different forms but there is always one common component across these cases: each accusation of fraud decreases the public’s trust in the health care system more and more. This is precisely why the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative was created. The Attorney General and the Secretary of Health and Human Services partnered up in order to crack down on Medicare and Medicade fraud and (hopefully, someday) reestablish the public’s trust in the health care system. In May of 2015 HEAT brought to justice yet another company accused of fraud.

Medco Health Solutions Inc.—a wholly-owned subsidiary of the pharmacy benefit manager Express Scripts Holding Company that provides pharmacy benefit management services to clients who receive subsidies under the Medicare Retiree Drug Subsidy program—agreed to pay the government $7.9 million to settle allegations that it engaged in a kickback scheme in violation of the False Claims Act. This qui tam Medicare lawsuit settlement was the result of a coordinated effort among the Civil Division, the U.S. Attorney’s Office of the District of Delaware and the U.S. Department of Health and Human Services-Office of the Inspector General.

This settlement revolved allegations that Medco solicited remuneration from AstraZeneca, a pharmaceutical manufacturer, in exchange for identifying Nexium as the “sole and exclusive” proton pump inhibitor on certain of Medco’s Prescription drug lists known as formularies. The United States alleged that Medco received some or all of the remuneration from AstraZeneca in the form of reduced prices on the following AstraZeneca drugs: Prilosec, Toprol XL and Plendil. The United States contended that this kickback arrangement between Medco and AstraZeneca violated the Federal Anti-Kickback statute, and thereby caused the submission of false or fraudulent claims for Nexium to the Retiree Drug Subsidy Program. Earlier this year, in January, the United States and AstraZeneca reached a $7.9 million settlement to resolve kickback allegations arising out of the same conduct. It’s important to note that the claims settled by this agreement are allegations only. There has been no determination of liability.

It is of the utmost importance that cases like these be brought to light. As stated by Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division, “Hidden financial agreements between drug manufacturers and pharmacy benefit managers can improperly influence which drugs are available to patients and the price paid for drugs.”

This civil settlement resolves a qui tam lawsuit filed by former AstraZeneca employees Paul DiMattia and F. Folger Tuggle on behalf of the government. Lawsuits like these are filed under the False Claims Act and those private citizens who come forward and file are entitled to a share of the settlement, known as whistleblower rewards. The former AstraZeneca employees’ share of the settlement has not yet been determined.


Government Settles False Claims Act Allegations against Florida Neurologist for $150,000

If you think a False Claims Act attorney would eventually get over the feelings of dismay when faced with case after case involving various types of fraud, think again. When there are cases such as Medicare fraud cases that can have immense negative effects on a number of people in a number of different ways the dismay never fades away. Thanks on large part to the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May of 2009 by the Attorney General and the Secretary of Health and Human Services, more and more False Claims Act cases—such as the one described below—are being filed.

In May of 2015 Dr. Sean Orr of Jacksonville, Florida agreed to pay $150,000 to settle allegations that he violated the False Claims Act by providing medically unnecessary services and drugs to federal health care program beneficiaries. This settlement was reached about a year after the government settled related allegations against Dr. Orr’s former employer, Baptist Health System Inc. which is the parent company to Baptist Neurology Inc. and Baptist Medical Center-Jacksonville, for $2.5 million.

The settlement with Dr. Orr resolves allegations that, from September 2009 to April 2012, he knowingly misdiagnosed certain patients with various neurological disorders, such as multiple sclerosis (MS), which caused federal health care programs to be billed for medically unnecessary services and drugs. The alleged misconduct affected beneficiaries in the Medicare, TRICARE and the Federal Employees Health Benefits programs. The settlement agreement was based on Orr’s ability to pay. It is important to note that the claims resolved by this settlement are allegations only and there has been no determination of liability.

According to the Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division, “The Justice Department will continue to hold accountable physicians who make false diagnoses or otherwise provide medically unnecessary treatment.”

The government’s investigation of Dr. Orr was initiated by a qui tam lawsuit filed under the False Claims Act by former Baptist Neurology Inc. employee, Verchetta Wells. The act allows private citizens to file suit for false claims on behalf of the government and to share in the government’s recovery. Ms. Wells will receive $26,250 in whistleblower rewards from the settlement with Dr. Orr


Watsonville Nursing Home Owners, Operators and Manager Agree to Pay $3.8 Million to Settle Allegations of False Claims

You may think that false claims cases ending in million dollar settlements only involve large Fortune 500 corporations, but smaller companies commit fraud as well. The number of companies settling cases in which the integrity of their practices is being questioned seems to be multiplying by the day. The saddest part is that sometimes these cases don’t just cheat the government out of money; sometimes there are Medicare fraud cases that are said to have cost people their lives. Premature death was among the allegations filled against two nursing homes in the San Francisco Bay Area last year.

The owners, operators and manager of two Watsonville, Ca nursing homes have agreed to pay $3.8 million to settle allegations that they submitted false claims to the United States. The settlement, which was reached in May of 2015, stems from a complaint alleging that the defendants violated the Federal False Claims Act. The complaint was filed by the United States on August 29, 2014, in U.S. District Court of the Northern District of California. In the Complaint, the United States alleged that the aforementioned entities submitted false claims for materially substandard or worthless services to Medicare and Medical programs. Specifically, the complaint alleges that between 2007 and 2012, the defendants persistently overmedicated elderly and vulnerable residents of the nursing homes, causing infection, sepsis, malnutrition, dehydration, falls, fractures, pressure ulcers, and for some residents, premature death. The named defendants are the nursing homes—Country Villa Watsonville East Nursing Center (renamed Watsonville Nursing Center in April 2014) and Country Villa Watsonville West Nursing and Rehabilitation Center (renamed Watsonville Post-Acute Center in April 2014); the for-profit entities that own and operate the nursing homes, CF Watsonville East, LLC and CF Watsonville West, LLC; the entities responsible for the management of the nursing homes under consulting agreements with the owners, Country Villa Health Service Corporation, dba Country Villa Health Services.

“This case demonstrates our continued commitment to investigate, and hold accountable, individuals and organizations seeking to victimize the elderly through the misuse of taxpayer funded Medicare and Medical programs,” said Special Agent in Charge David J. Johnson of the FBI’s San Francisco Field Office.

Deciding whether or not to be a False Claims Act whistleblower is a difficult choice. But cases such as this one show us that reporting Medicare fraud in particular could potentially save a life. If you’re not sure where to begin, there are a number of government agencies, such as your local Department of Public Health, that can help you understand how to report Medicare Fraud.


Durable Medical Equipment Suppliers to Pay $7.5 Million to Resolve False Claims Act Allegations

In May of 2009 the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative was announced by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicaid and Medicare fraud cases through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act under which a private party, or Medicare whistleblower, can sue for false claims on behalf of the government and share in any recovery. It’s thanks to these efforts that cases such as the following are coming to light and getting resolved.

Last month the Justice Department announced that Orbit Medical Inc. and Rehab Medical will pay $7.5 million to resolve allegations that Orbit submitted false claims to federal health care programs for power wheelchairs and accessories. To qualify for these Medicare wheelchair reimbursements, a physician must conduct a face-to-face examination of the beneficiary and provide the supplier with a written prescription for a power wheelchair within 45 days of such an encounter, along with documentation that supports the medical necessity of the device. Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division said, “Power wheelchair suppliers must bill federal healthcare programs accurately and honestly to ensure that federal dollars are used for individuals who truly need these mobility devices.” According to the qui tam lawsuit brought against Orbit, they did not fullfill this obligation.

The settlement with Orbit Medical and Rehab Medical resolves allegations that Orbit sales representatives knowingly altered physician prescriptions and supporting documentation to get orbit’s power wheelchair and accessory claims paid by Medicare, the Federal Employees Health Benefits Plan and the Defense Health Agency. The government alleged that Orbit sales representatives changed or added dates to physician prescriptions and chart notes to falsely document that the prescription was sent to the supplier within 45 days of the face-to-face beneficiary exam; created or altered chart notes and other documents to falsely establish the medical necessity of the power wheelchair or accessory; forged physician signatures on prescriptions and chart notes; and added facsimile stamps to supporting documentation to make it appear as though the physician’s office had sent the documents to Orbit. “The resolution of this case helps to restore funds taken from the Medicare trust fund through the use of falsified records and billings… Health care fraud is aggressively prosecuted in Utah and every effort is made to restore government funds taken through such conduct,” said U.S. Attorney Carlie Christensen of the District of Utah.

The allegations resolved by this settlement were filed by two former Orbit employees; the whistleblowers were reporting Medicare Fraud. The former employees, Dustin Clyde and Tyler Jackson will receive approximately $1.5 million in whistleblower rewards. The whistleblowers’ suit also named as a defendant Jake Kilgore, the former vice president and sales manager at Orbit Medical for the Western region of the United States and this settlement does not resolve the pending claims against Kilgore. –


Garden State Cardiovascular Specialists P.C. Agrees to Pay $3.6 Million for Allegedly Submitting False Claims to Federal Health Care Programs

In May of this year Garden State Cardiovascular Specialists P.C. agreed to pay more than $3.6 million to resolve allegations that its facilities falsely billed federal health care programs for tests that were not medically necessary. Garden State, a cardiology practice which owns and operates several facilities in New Jersey under the name NJ MedCare/NJ Heart, agreed to this settlement to resolve allegations that were raised in a lawsuit filed under the qui tam whistleblower provisions of the False Claims Act.

This settlement resolves allegations that Garden State and its principals, Jasjit Walia M.D. and Preet Randhawa M.D., submitted claims to Medicare for various cardiology diagnostic tests and procedures which were not medically necessary. It is important to note that the claims settled by this agreement are allegations only, and there has been no determination of liability.

The Medicare fraud whistleblower that brought this qui tam lawsuit forward, Cheryl Mazurek, is set to receive more than $648,000 in whistleblower rewards as part of the settlement. There are thousands of innocent people working for big government organizations who see fraudulent practices like these firsthand. Stepping forward and blowing the whistle takes courage. If you are thinking of stepping forward and being a Medicare whistleblower or whistleblower of any kind, be sure to do your research so you’re sure to choose a law firm with experience in and a vast knowledge of whistleblower law.


Global Computer Enterprises, Inc. Agrees to Pay $9 Million to Settle Civil False Claims Act Allegations

It’s a sad state of affairs when fraud and business practice integrity issues run rampant among big corporations. Unfortunately, that is true of the world that we live in today. In April of this year one such corporation, Global Computer Enterprises, Inc. and its president and sole owner, Raed Muslimani agreed to pay $9 million to settle allegations brought forward by a False Claims Act whistleblower.

GCE is a cloud-based “software as a service” provider. The whistleblower alleged that GCE concealed its utilization of prohibited engineers and employees on software services contracts with the federal government. GCE was competitively awarded federal contracts with the U.S. Department of Labor, the Equal Employment Opportunity Commission, the General Services Administration, the United States Secret Service, and the United States Coast Guard. During the competitions for those contracts and after award, GCE allegedly misrepresented and/or concealed that it was utilizing engineers and other employees who were expressly prohibited from working on the contracts due to their citizenship/immigration statuses, security clearance statuses, labor qualifications and/or overseas locations.

A qui tam lawsuit was being prepared when GCE and Muslimani agreed to pay the United States $9 million out of GCE’s Chapter 11 proceeding to resolve the allegations filed under the False Claims Act. It is important to note that the civil claims settled by GCE, Muslimani and the United States were allegations only and there was no determination of civil liability. The settlement obtained in this matter was the result of a coordinated effort by the U.S. Attorney’s Office for the Eastern District of Virginia and the Financial Litigation Section and Fraud Section of the Commercial Litigation Branch of the Civil Division of the Department of Justice


UPS to Pay $25 Million in False Claims Suit

Last month the United Parcel Service Inc. (UPS), a package delivery company based out of Atlanta, agreed to pay $25 million to resolve allegations that it submitted false claims to the federal government in connection with its delivery of Next Day Air overnight packages. This is just another case in the long line of recent suits being filed under the False Claims Act Whistleblower provision.

UPS holds contracts with the U.S. General Services Administration and the U.S. Transportation Command, which provides support to various Department of Defense agencies. These contracts guaranteed delivery of packages by specific times the following day. This suit was filed following allegations that from 2004 to 2014 UPS engaged in practices that concealed its failure to comply with its delivery guarantees, thereby depriving federal customers of the ability to request refunds for the late delivery of packages.

It should be noted that this civil settlement resolves claims made in the lawsuit filed under the whistleblower provision of the False Claims Act. These claims are allegations only and there has been no determination of liability.

The Whistleblower Protection Act provides protection to private parties who file suit on behalf of the United States for false claims. Whistleblowers are entitled to whistleblower rewards, most often in the form of a portion of the government’s recovery resulting from the suit. The UPS civil lawsuit was filed in the Eastern District of Virginia by Robert K. Fulk, a former employee of UPS. He will receive $3.75 million from this settlement.


PharMerica to Pay $31.5 Million for Medicare Fraud

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

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

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

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


Hospital Administrator Gets 40 Years in Prison for Medicare Fraud

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

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


DaVita HealthCare Sets Aside $495 Million for Qui Tam Case

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

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

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