KMART Corporation Pays $1.4 Million to Resolve False Claims Allegations in Connection with Drug Manufacturer Coupons and Gas Discount
KMART Corp., better known as the Kmart department store chain that operates approximately 780 in- store pharmacies throughout the United States, Puerto Rico and the U.S. Virgin Islands, has paid the United States $1.4 million to resolve allegations that it violated the False Claims Act. This suit was filed by a qui tam whistleblower who is a former Kmart pharmacist and had allegedly witnessed Kmart’s illicit behavior.
This settlement resolves allegations that Kmart violated the False Claims Act by using drug manufacturer coupons and gasoline discounts as improper inducements to Medicare program beneficiaries. The United States government contended that between June 2011 and June 2014, Kmart deliberately and illicitly influenced the choices made by Medicare beneficiaries to use Kmart pharmacies to fill their prescriptions by authorizing the Medicare beneficiaries to use drug manufacturer coupons to reduce or abolish prescription co-pays that they otherwise would have been required to pay. It was alleged that Kmart’s conduct had caused Medicare beneficiaries to seek more expensive, brand name drugs in lieu of cost-effective generic drugs, which resulted in the government’s costs to increase without any added medical benefit.
Joshua Leighr, the False Claims Act whistleblower and former Kmart pharmacist who brought this case forward, will receive approximately $248,500 from the settlement—this is Mr. Leighr’s whistleblower reward for challenging Kmart and filing a lawsuit on behalf of the United States.
This settlement is a demonstration of the government’s emphasis on combating health care fraud and it illustrates the problem of Medicare fraud cases in the United States
North Broward Hospital District Agrees to Pay United States $69.5 Million to Settle False Claims Act Allegations
North Broward Hospital District is one of the nation’s largest public hospital systems and this week it became yet another entity in the U.S. to settle a qui tam lawsuit. North Broward Hospital District is a special taxing district of the state of Florida that operates hospitals and other health care facilities in the Broward County, Florida area. Earlier this week the hospital district agreed to pay the United States $69.5 million to settle allegations that it violated the False Claims Act by engaging in improper financial relationships with referring physicians. This agreement marks the largest settlement ever reached without litigation.
This settlement resolves allegations that the hospital district provided compensation to nine employed physicians that exceeded the fair market value of their services. The United States contended that these agreements violated the Stark Statute—which restricts the financial relationships that hospitals may have with doctors who refer patients to them—as well as the False Claims Act.
Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, had this to say about the settlement: “The Department of Justice has long-standing concerns about improper financial relationships between health care providers and their referral sources, because those relationships can alter a physician’s judgement about the patient’s true health care needs and drive up health care costs for everybody… In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable.”
This settlement stems from a qui tam whistleblower lawsuit filed on behalf of the government by Ft. Lauderdale orthopedic surgeon, Dr. Michael T. Reilly. A whistleblower reward of just over $12 million will be awarded to Dr. Reilly
Medical Device Manufacturer NuVasive Inc. to Pay $13.5 Million to settle False Claims Act Allegations
As a whistleblower law firm, we feel it’s our duty to keep you informed about the happenings in the False Claims Act world. So here’s another qui tam whistleblower case you might have missed:
In July of 2015, California-based medical device manufacturer NuVasive Inc. agreed to pay the United States a $13.5 million settlement to resolve allegations that the company caused health care providers to submit false claims to Medicare and other federal health care programs for spine surgeries by marketing the company’s CoRent System for surgical uses that were not approved by the U.S. Food and Drug Administration (FDA). The settlement also resolved allegations that NuVasive caused false claims by paying kickbacks to induce physicians to use the company’s CoRent System.
The United States alleged that between 2008 and 2013, NuVasive promoted the use of the CoRent System for surgical uses that were not approved or cleared by the FDA, including the use in treating two complex spine deformities, severe scoliosis and severe spondylolistheses. As a result of this conduct, the United States alleged that NuVasive caused the physicians and hospitals to submit false claims to federal health care programs for certain spine surgeries that were not eligible for reimbursement.
As far as Medicare fraud cases go, this is a particularly disturbing one. The laws put in place by the FDA are there to ensure that medical devices are safe and effective; if medical device manufacturers aren’t held accountable to those laws, that leaves the general public—those of us who would just believe that our doctors are using safe and approved devices—at risk. Furthermore, according to Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, “It is also imperative that manufacturers not improperly influence the selection of medical devices in order to ensure that these decisions are based on the needs and interests of patients, not on a physician’s own financial interests.”
Cases such as these are often brought on thanks to whistleblower protection under the False Claims Act. In this case, former NuVasive sales representative Kevin Ryan stepped forward to file suit against his former employers on behalf of the United States. Mr. Ryan’s whistleblower reward will be approximately $2.2 million from the settlement
Quest Diagnostics Pays the United States $1.79 Million to Resolve False Claims Act Allegations
Another qui tam Medicare case came to a resolution this week when Quest Diagnostics Inc. and Quest Diagnostics Clinical Laboratories Inc. (known collectively as Quest Diagnostics) paid the United States $1.79 million to settle claims that it violated the False Claims Act. Whistleblower lawyers are keeping busy as the United States aggressively pursues Medicare fraud cases such as this one.
Quest Diagnostics’ settlement resolves allegations that the company submitted duplicative claims to Medicare for certain venipuncture services and diagnostic tests and certain panel tests and select components of those panels. The United States alleged that these payments violated the False Claims Act. It is important to note that the claims settled by this agreement are allegations only, and there has been no determination of liability.
This settlement resolves a lawsuit filed in the Eastern District of California under the qui tam whistleblower provisions of the False Claims Act. The whistleblower who stepped forward in this case will receive will receive $358,000 in whistleblower rewards.
Bullhead City Physician to Pay $207,000 to Resolve False Claims Allegations
If you’ve been keeping up with our “In the News” section then you have probably noticed that the U.S. seems to be bursting at the seams with Medicare fraud cases. It’s safe to say that qui tam law firms such as ours are keeping quite busy. Well this week another case filed by a False Claims Act whistleblower was resolved.
Dr. Bashir Azher, M.D., an Arizona-licensed physician who has a practice in Bullhead City, agreed to pay the United States $207,988 to resolve civil allegations that he violated the False Claims Act by submitting false bills to Medicare for prostate laser ablation procedures. This settlement resolves a qui tam lawsuit filed in June of 2014 by Dr. Arnaldo Trabucco, M.D., who will receive a share of the settlement as a whistleblower reward. It’s important to note that this settlement is neither an admission of liability by Dr. Azher nor a concession by the United States that its claims are unfounded.
The settlement agreement resolves allegations that from February 2006 through July 2014, Dr. Azher knowingly submitted materially false claims for reimbursement for prostate laser ablation procedures that were too short to generate a therapeutic benefit, failed to meet professionally recognized standards of care, were medically unnecessary, and/or violated applicable Medicare regulations.
According to Timothy B. DeFrancesca, Acting Special Agent in Charge for the Los Angeles Region of the United States Department of Health and Human Services, Office of Inspector General, “When physicians fail to meet professionally recognized standards of care while providing medically unnecessary procedures, taxpayers’ dollars are wasted and the public’s trust in the medical profession is at risk.” He went on to say, “Our agents will continue to hold health care providers accountable for improper claims.”
Missouri Hospital Agrees to Pay United States $5.5 Million to Settle Alleged False Claims Act Violations
Another qui tam Medicare case, brought on by a Medicare fraud whistleblower, reached a settlement this week. Two Southwest Missouri health care providers—Mercy Health Springfield Communities, formerly known as St. John’s Health System Inc., and its affiliate, Mercy Clinic Springfield Communities, formerly known as St. John’s Clinic—agreed to pay the United States $5.5 million to settle allegations that they violated the False Claims Act by engaging in improper financial relationships with referring physicians.
The U.S. alleged that the Missouri health care providers submitted false claims to the Medicare program for services rendered to patients referred by physicians who received bonuses based on a formula that improperly took into account the value of the physicians’ referrals of patients to the clinic. These allegations are in direct violation of federal law that restricts the financial relationships that hospitals and clinics may have with doctors who refer patients to them.
Principal Deputy Assistant Attorney General Benjamin C. Mizer, the head of the Justice Department’s Civil Division, had this to say about the case: “When physicians are rewarded financially for referring patients to hospitals or other health care providers, it can affect their medical judgement, resulting in overutilization of services that drives up health care costs for everyone. In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable.”
As I mentioned earlier, the allegations resolved by this settlement arose from a qui tam lawsuit filed by whistleblower, Dr. Jean Moore, a physician employed by one of the defendants. Dr. Moore will receive a whistleblower reward from the recovery in the amount of $825,000. You can find more information on reporting Medicare fraud here: medicare.gov
For-Profit Education Company to Pay $13 Million to Resolve Several Cases Alleging Submission of False Claims for Federal Student Aid
We’re going to take a little break from discussing Medicare fraud cases this week. The False Claims Act can be violated on many fronts and a False Claims Act whistleblower can step in whenever it is. Today we’re going to look at a case involving fraudulent claims made to the Department of Education.
In June, 2015 Education Affiliates (EA)—a for-profit education company based in White Marsh, Maryland—agreed to pay $13 million to the United States to resolve allegations that it violated the False Claims Act by submitting false claims to the Department of Education for federal student aid for students enrolled in its programs. EA operates 50 campuses in the United States under various trade names which provide post-secondary education training programs in several professions in the states of Alabama, Florida, Maryland, Ohio and Texas. This settlement resolved allegations and administrative claims involving schools in all five states.
The government’s false claims allegations against EA included the claim that employees at the All State Career campus in Baltimore altered admissions test results so as to admit unqualified students, created false or fraudulent high school diplomas and falsified students’ federal aid applications. The government also alleged that multiple EA schools referred prospective students to “diploma mills” to obtain invalid online high school diplomas. Further resolved were allegations related to EA schools in Birmingham, Alabama, Houston and Cincinnati, including violations of the ban on incentive compensation for enrollment personnel, misrepresentations of graduation and job placement rates, alteration of attendance records and enrollment of unqualified students.
“Students who apply for federal financial aid to attend trade and professional schools are required to show that they have the necessary skills to complete the educational program and work in the field,” said U.S. Attorney Rod J. Rosenstein of the District of Maryland. “This settlement resolves the government’s allegations that Education Affiliates defrauded the government by changing students’ test scores and enrolling students with invalid diploma mill high school ‘diplomas’ ordered online.”
This qui tam law suit was filed under the whistleblower provision of the False Claims Act. The five whistleblowers in this case will receive whistle blower rewards totaling approximately $1.8 million
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.
