The Government Intervenes in False Claims Act Lawsuit against the City of Los Angeles and CRA/LA
Whistleblowing often contributes to the process of uncovering waste, fraud, and abuse by aiding some of society’s most disadvantaged members. Proof of this was demonstrated last week when the Justice Department announced that it was intervening in a lawsuit against the City of Los Angeles and the CRA/LA (formerly the Community Redevelopment Agency of the City of Los Angeles). The suit alleges that CRA/La and the City of Los Angeles falsely certified that they were in compliance with HUD’s accessibility laws specifically Section 504 of the Rehabilitation Act. This act is meant to ensure that disabled individuals have equal access to public housing.
According to the lawsuit CRA/LA and the City of Los Angeles applied for and received millions of dollars from HUD and that a portion of that money was meant to provide affordable housing for people with disabilities in compliance with HUD’s accessibility laws. The laws, in part, require that five percent of all units in federally-assisted multifamily housing be accessible to people with mobility impairments. They also require that the city and CRA/LA to maintain a list of accessibility features for those with any number of impairments including auditory and visual impairments. Finally, the law requires that a monitoring program be put in place to ensure that the disabled are not denied the benefits of federally-assisted housing programs.
As a precondition to receiving HUD funds, the City was required to comply with Section 504 of the Fair Housing Act. The lawsuit alleges that none of the HUD-assisted multifamily housing supported by CRA/LA met the minimum number of accessible units. The lawsuit also alleges the City and CRA/LA failed to monitor sub-recipients of HUD funds for compliance with accessibility laws. Finally the government alleges that the City and CRA/LA failed to maintain a publicly available list of accessible units and their features.
“This case alleges that the City of Los Angeles repeatedly violated the law by falsely certifying that millions of federal dollars were being used to build housing that included units accessible to people with disabilities,” said Acting U.S. Attorney Sandra R. Brown for the Central District of California. “While people with disabilities struggled to find accessible housing, the city and its agents denied them equal access to housing while falsely certifying the availability of such housing to keep the dollars flowing. The conduct alleged in this case is very troubling because of the impact on people who did not have access to housing that met their needs.”
The lawsuit was filed in the U.S. District court in Los Angeles by Mei Ling, a resident of Los Angeles who is confined to a wheel chair, and the Fair Housing Council of San Fernando Valley. Mei Ling filed the lawsuit under the qui tam or whistleblower provisions of the False Claims Act. The Act permits individuals to sue on behalf of the federal government in cases where False Claims Act violations are thought to have occurred. The Act also allows whistleblowers to share in any recovery. If you have chosen to report a False Claims Act violation we advise you to contact a qui tam law firm. A qui tam attorney will be able to advise you on such matters and protect your rights. 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).
Former Chief Operating Officer of Freedom Health to Pay $32.5 Million to Settle False Claims Act Allegations
As has been the case all too often, the government is again alleging that another health care provider has given more importance to monetary considerations than it has over medical necessity when it comes to patient care. Indeed, late last week, the Justice Department announced that former Chief Operating Officer (COO) of Freedom Health, Siddhartha Pagidipati, has agreed to pay $750,000 to resolve False Claims Act violations. Freedom Health – a Florida-based provider of managed care serves – has agreed to pay more than $31 million for its part in engaging in illegal schemes to maximize its payment from the government in connection with Medicare Advantage plans.
“When entering into agreements with managed care providers, the government requests information from those providers to ensure that patients are afforded the appropriate level of care,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Today’s result sends a clear message to the managed care industry that the United States will hold managed care plan providers responsible when they fail to provide truthful information.” The government alleged that Freedom Health submitted unsupported diagnosis codes to The Centers for Medicare & Medicaid Services (CMS) which resulted in inflated reimbursement rates related to two Medicare Advantage plans operating in Florida. Moreover, the government also alleged that Freedom Health misrepresented to CMS the scope of its network of providers in its application to the provider. These representations allegedly began to occur in 2008 and were later expanded in 2009 into new Florida counties and in other states.
“Medicare Advantage insurers must play by the rules and provide Medicare with accurate information about their provider networks and their patients’ health,” said Chief Counsel to the Inspector General Gregory Demske of the Department of Health and Human Services Office of Inspector General (HHS-OIG). “OIG will investigate and hold managed care organizations accountable for fraud. Moving forward, the innovative CIA reduces the risks to patients and taxpayers by focusing on compliance issues unique to Medicare Advantage plans.” The original case that lead to these settlements was brought about by a lawsuit under the qui tam or whistleblower, provisions of the Federal False Claims Act and the Florida False Claims Act. The qui tam provisions of this Act permits private individuals to sue on behalf of the government in cases involving false claims and to share in any subsequent recovery. The whistleblower in this case is former Freedom Health employee Darren D. Sewell. His share of the settlement has not yet been determined.
Optimum HealthCare Inc., America’s 1st Choice Holdings of Florida LLC, Liberty Acquisition Group LLC, Health Management Services of USA LLC, Global TPA LLC, America’s 1st Choice Holdings of North Carolina LLC, America’s 1st Choice Holdings of South Carolina LLC, America’s 1st Choice Insurance Company of North Carolina Inc. and America’s 1st Choice Health Plans Inc., are all corporate entities of Freedom Health and as a result were a part of the settlement. If you have been accused of violating The False Claims Act it is advised that you contact a False Claims Act lawyer. A qui tam law firm will be able to advise you on such matters and protect your rights. 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).
United States Joins in Second False Claims Act Lawsuit against United Health Group Inc
Often, alleged healthcare fraud involves the proliferation of false and inaccurate information about patient health records. These kinds of activities endanger patient health and illegally enrich health care providers who are involved in such fraud. This was what the Justice Department alleged when last week it announced that it had filed a complaint against UnitedHealth Group Inc. (UHG) for the second time in two weeks. The government is alleging that UHG knowingly obtained inflated risk adjustment payments based on untruthful information about the health status of beneficiaries enrolled in UHG’s Medicare Advantage Plans. In a related action involving false claims submitted to Medicare, the government filed a complaint earlier this month in United States ex rel. Swoben v. Secure Horizons. “The Department of Justice’s pursuit of this matter illustrates its firm commitment to ensure the integrity of the Medicare Program, including those parts of the program that rely on the services of Medicare Advantage Organizations,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.
UHG is the nation’s largest Medicare Advantage Organization. It receives a monthly “risk adjustment” payment from Medicare for each enrolled beneficiary. These adjustments are primarily based on the health status of the beneficiary which is reflected in the diagnosis the patient receives from physicians. The complaint filed last week alleges that UHG knowingly ignored information about the medical conditions of beneficiaries and this in turn increased the risk adjustment payments Medicare gave to UHG. Specifically, the lawsuit maintains that UHG conducted a program designed to identify diagnoses not reported by physicians that would increase its risk adjustment payments. However, UHG allegedly ignored information in this program that showed that thousands of diagnoses provided to Medicare were invalid and thus did not support payments UHG received. Thus, UHG avoided repaying Medicare monies they owed the program by ignoring this information.
Moreover, the complaint alleges that UHG ignored information about invalid diagnoses based on financial incentives. Health care providers received payments from UHG connected to the amount of payments that UHG received from Medicare. UHG allegedly knew that its financial arrangement with certain health care providers created an incentive for these providers to report invalid diagnoses. This fact was confirmed by UHG’s review of these providers’ medical records. UHG is then said to have ignored evidence identifying invalid diagnoses from these providers and thus avoided repaying Medicare monies that neither it nor these providers were entitled. “To ensure that the program remains viable for all beneficiaries, the Justice Department remains tireless in its pursuit of Medicare fraud perpetrated by healthcare providers and insurers,” said Acting U.S. Attorney Sandra R. Brown for the Central District of California. “The primary goal of publicly funded healthcare programs like Medicare is to provide high-quality medical services to those in need – not to line the pockets of participants willing to abuse the system.”
The lawsuit was filed by Benjamin Poehling, the former finance director for the UHG group. Poehling managed UHG’s Medicare Advantage Program and filed his lawsuit under the qui tam provisions of the False Claims Act. The qui tam provisions of the False Claims Act permit private parties to sue on behalf of the federal government and to then share in any subsequent recovery. The government intervened in this case as part of its ongoing effort to crack down on healthcare fraud. The False Claims Act is one tool that it uses to this end.
If you have chosen to disclose wrongdoing it is also advised that you contact a qui tam lawyer. A False claims act lawyer will be able to advise you on such matters and protect your rights. 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).
Psychiatrist Convicted for his part in $158 Million Medicare Fraud Scheme
Sometimes convictions for violations of the False Claims Act can result in more than just corporate integrity agreements (CIA) and fines. They can sometimes result in prison terms for the accused. Case in point: Earlier this week, the Justice Department announced the conviction of a Houston-area psychiatrist for his role in a $158 million Medicare fraud scheme. The Justice Department worked with several agencies including the IRS and the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU). Riaz Mazcuri, of Harris County Texas, was convicted of one count of conspiracy to commit health care fraud and five counts of health care fraud. Sentencing is to take place on Oct. 10, 2017 before a US District Judge in the Southern District of Texas. According to the government, from 2006 – 2012, Mazcuri and others defrauded Medicare by submitting false claims through Riverside General Hospital totaling $158 million. The claims submitted were for partial hospitalization program (PHP) services. (A PHP is a kind of intensive outpatient treatment for severe mental illness.)
The evidence presented at trial showed that Mazcuri participated in a scheme whereby Riverside paid bribes and kickbacks to group home owners and nursing home employees in exchange for sending Medicare patients to Riverside’s PHPs. Moreover, evidence showed that Mazcuri admitted and readmitted patients suffering from intense dementia and other mental illnesses into intensive psychiatric programs for years. Many of these patients did not qualify for the services that were purportedly provided at the PHPs. Mazcuri signed documents that allowed Riverside to bill Medicare $55 million of the $158 million that it billed Medicare for fraudulent psychiatric services.
To date, 15 others have been convicted for their participation in this scheme. Of those who have been convicted are Earnest Gibson III, the former president of Riverside and the operator of one of Riverside’s PHP satellite locations. The sentences of the convicted conspirators range from 5 to 45 years in prison. The case is being prosecuted by the Fraud Section of the U.S. Attorney’s Office for the Southern District of Texas. The investigation was conducted by several agencies including the FBI, HHS-OIG, IRS-CI RRB-OIG and the MFCU. Since its inception in March 2007, the Medicare Fraud Strike Force has charged nearly 3,000 defendants who have collectively billed the Medicare program for more than $11 billion. If you have been accused of violating The False Claims Act it is advised that you contact a qui tam Medicare lawyer. Qui tam law firms will be able to advise you on such matters and protect your rights. 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).
Prosecutor Not Allowed to Intervene in Lawsuit against Sprint
Joining a suit as a whistleblower is not always cut and dry. This was proven to be the case when earlier this month, The Ninth Circuit court in San Francisco ruled that a prosecutor, who had accused Sprint of cheating the United States out of millions of dollars in surveillance services, would not be able to intervene in the government’s lawsuit against the telecom. A three-judge appeals panel ruled that the prosecutor, John Christopher Prather, did not have a “significantly protectable interest” in the government’s False Claim Act suit against Sprint. The court also ruled that Prather was not entitled to a share of the settlement simply because he had filed a qui tam lawsuit in 2009. U.S. Circuit Judge Marsha Berzon wrote for the court in a 20-page opinion that Prather could not, “…obtain a monetary bounty under the FCA on his jurisdictionally barred claims…by joining a related FCA action brought by the government after the dismissal of his qui tam action.”
Prather maintains that while working for the New York Attorney General’s Organized Crime Taskforce and the Metropolitan Transportation Authority of the Inspector General in the 2000s he noticed the cost of government wiretapping rising greatly. Prather stated that the labor cost of bugging cell phones should have been less expensive than bugging landline phones. Prather maintained that the FBI and the Justice Department was charged 10 times what they should have been. Prather says he grew suspicious of these rising costs and decided to file a whistleblower suit in 2009 under the FCA against Sprint, AT&T, Verizon and two other phone companies. The government did not intervene in the case at the time. U.S. District Judge Charles Breyer dismissed the suit in 2013 because Prather wasn’t the original source of the fraud allegations. Sprint eventually agreed to pay $15 million to settle the case.
The Ninth Circuit ruling was based on in part by The Supreme Court’s 2007 decision in Rockwell International Corp. v. United States. The court ruled in that case that government intervention could not supersede a plaintiff’s failure to qualify as the originator of the FCA suit. If you have chosen to disclose wrongdoing it is also advised that you contact a qui tam law firm. Attorneys who work for qui tam law firms can advise you on such matters and will work to protect your rights under the law.
Two Missouri Hospitals Agree to Pay $34 Million to Settle Alleged False Claims Act Violations
Part of the government’s effort at cracking down on health care fraud involves ensuring that healthcare providers remain motivated by medical necessity when it comes to treating patients and not by profit. This idea was demonstrated this week when The Department of Justice announced that Two Southwest Missouri health care providers had agreed to pay $34 million to resolve allegations that they violated the False Claims Act by engaging in improper financial relationships with referring physicians. The defendants are Mercy Hospital Springfield f/k/a St. John’s Regional Health Center and its affiliate, Mercy Clinic Springfield Communities. The defendants operate a hospital, clinic and infusion center.
The settlement resolves allegations that the health care providers submitted false claims to the Medicare Program for chemotherapy services rendered to patients referred by oncologists. The formula used in referring patients to these oncologists improperly took into account the value of their referrals to the infusion center operated by the institutions. Federal law limits the financial relationship that hospitals may have with doctors who refer patients to them. “When physicians are rewarded financially for referring patients to hospitals or other health care providers, it can affect their medical judgment, resulting in overutilization of services that drives up health care costs for everyone,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable.”
The allegations arose from a lawsuit filed by a whistleblower, Dr. Viran Roger Holden, a physician who was employed by one of the defendants. Dr. Holden’s lawsuit was filed based on the qui tam provisions of the False Claims Act. Under these provisions, private citizens can sue on behalf of the government for false claims and share in any subsequent recovery. Dr. Holden is scheduled to receive $5,440,000 as his share of the settlement. “When physician compensation improperly accounts for referrals, patients are left to wonder whether their doctor’s judgment has been tainted and motivated by financial interests,” said Special Agent in Charge Steven Hanson for the Department of Health and Human Services Office of the Inspector General. “Illegal financial reward has no place in health care. Today’s settlement should send a message that, together with our law enforcement partners, we will pursue these cases.”
The government’s intervention in this complaint illustrates its emphasis on combating health care fraud which goes back to the previous administration. The False Claims Act is one powerful tool it uses to prosecute offenders. Tips 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). If you have chosen to disclose wrongdoing it is also advised that you contact a whistleblower law firm. Whistleblower Medicare attorneys can advise you on such matters and will work to protect your rights under the law.
Indiana University Health and HealthNet Agree to $18 Million Settlement to Resolve Alleged False Claims Act Violations
Alleged violations of the Anti-Kickback Statute is a common theme among companies that are accused of governmental fraud. This fact was born out last month when Indiana University Health Inc. (IU Health) and Health Net, Inc. agreed to pay $18 million to resolve allegations that they violated state and federal false claims laws by engaging in an illegal kickback scheme related to the referral of IU Health’s OB/GYN patients to IU Health’s Methodist Hospital. Under the settlement agreement, IU Health and Health Net, Inc. agreed to pay $5.1 million to the United States and $3.9 million to the State of Indiana. “The payment of illegal remuneration to induce patient referrals interferes with health care providers’ independent judgment when they make referral decisions for their patients,” said Deputy Assistant Attorney General Joyce R. Branda for the Civil Division. “We will continue to pursue health care providers that engage in such conduct, which undermines public confidence in our health care system.”
The Anti-Kickback Statute (42 U.S.C. § 1320a-7b.) prohibits the knowing and willful payment of any remuneration to induce the referral of services or items that are paid by a federal health care program such as Medicaid, Medicare, TRICARE etc. Claims that violate the Anti-Kickback Statue are also false claims under the False Claims Act. The government alleged that from May 2013 through August 2016, IU Health provided HealthNet with an interest-free line of credit exceeding $10 million. The US further alleged that HealthNet was not expected to repay a large portion of this loan based on a financial arrangement between the two meant to induce HealthNet to refer its patients to IU Health’s Methodist Hospital.
“Helping to return millions of dollars in taxpayer funds to federal healthcare programs and the Indiana Medicaid program is critically important to me and my office,” said U.S. Attorney Joshua Minkler for the Southern District of Indiana. “Waste, fraud, and abuse can never be tolerated and tear at the fabric of first-class healthcare in this country.” The settlement came about as the result of a lawsuit that was filed by Dr. Judith Robinson, who formerly held a number of positions at both Methodist Hospital and HealthNet. Dr. Robinson filed her lawsuit in federal court in Indianapolis under the qui tam provisions of the False Claims Act. The qui tam provisions permit private individuals to bring a lawsuit on behalf of the government and to share in any subsequent recovery. Dr. Robinson is scheduled to receive approximately $2.8 million out of the federal share of the recovery. 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). If you have chosen to disclose wrongdoing it is also advised that you contact a qui tam attorney. A qui tam lawyer can advise you on such matters and will work to protect your rights under the law.
The Virginia Department of Social Services Agrees to Pay $7.1 Million to Resolve Allegations that it Violated the False Claims Act
Sometimes alleged fraudulent activities committed against the government are nurtured by an entire administrative culture. This was the case when last month the Justice Department announced that the Virginia Department of Social Services (VDSS) had agreed to pay the government $7,150,436 to settle allegations that it violated the False Claims Act in regards to the Supplemental Nutrition Assistance Program (SNAP). SNAP is a program administered by the U.S. Department of Agriculture (USDA) that provides financial assistance for low-income families and individuals to buy nutritious food. Since 2010, SNAP has served more than 45 million Americans per month. “SNAP is an important vehicle for helping needy families,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “This settlement reflects the Justice Department’s commitment to ensuring that taxpayer funds are spent appropriately so that the public can have confidence in the integrity of vital programs like SNAP.”
The government relies on the states to determine the eligibility of applicants, to administer benefits for the same and to perform quality control to ensure that the eligibility decisions are correct. The USDA reimburses states for their administrative expenses in administering SNAP. The government also pays performance bonuses to states that report the lowest and most improved error rates each year. Finally, it can also impose monetary sanctions for states that do not improve. VDSS admitted, as part of the settlement, that beginning in 2010 it retained a quality control consultant to reduce its SNAP benefits determination error rate by training QC workers to “use whatever means necessary” to find a benefits decision “correct” rather than in error. Moreover, VDSS admitted that when control staff could not find a benefits decision to be correct, that they were instructed to find a reason to drop the case. Through its use of these biased methods, VDSS was improperly awarded USDA bonuses from 2011 – 2013.
VDSS further admitted that QC workers did not want to use the methods proposed by the consultant VDSS retained. VDSS said that the QC workers did not wish to do so because they believed the method lacked integrity, injected bias into the QC process and that it violated USDA regulations. QC workers communicated these concerns to their manager but were pressured by being threatened with termination and negative performance reviews. VDSS also admitted that workers who complained about the process were denied teleworking and flexible scheduling privileges and otherwise harassed. As part of the settlement agreement, VDSS has taken corrective actions that began back in 2015. Namely, it agreed to terminate its use of the improper quality controls methods devised by Julie Osnes Consulting.
“We appreciate the commitment and investigative assistance provided by our partners at the U.S. Department of Justice’s Civil Division, U.S. Attorney’s Office, and Virginia Office of the State Inspector General,” said Special Agent-in-Charge Bethanne M. Dinkins of the USDA Office of Inspector General (OIG). “We also wish to note the technical assistance provided by our colleagues in the Office of Audit at USDA, OIG. During our investigation, we worked together to address the concerns of state employees and others who alleged that the integrity of the SNAP quality control process was weakened by third-party consultants.” 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). If you have chosen to disclose wrongdoing it is also advised that you contact a false claim act attorney. Whistleblower lawyers specialize in all areas related to the False Claims Act and will be able to advise you on such matters.
Quest Diagnostic Agrees to Pay $6 Million to Settle Allegations of Kickbacks and Unnecessary Testing
The government’s prosecution on companies that put monetary gain over medical consideration is a common theme in its crackdown against health care fraud. The government proved this fact last week when the Justice Department announced that a blood laboratory testing company Quest Diagnostics had agreed to pay $6 million to resolve allegations that it violated the False Claims Act by paying kickbacks to physicians and patients to induce the use of their Berkeley HeartLab facility in Alameda, California. Quest has also been accused of having charged for medically unnecessary tests as well. Quest acquired Berkeley HeartLab Inc., (BHI) in 2011 and has ended the conduct that prompted the settlement. “We rely on doctors to provide honest, independent recommendations regarding clinical testing,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Companies that pay kickbacks to referring doctors corrupt those doctors’ independence, leaving patients vulnerable to expensive and unnecessary testing.”
According to the government’s complaint, BHI paid kickbacks in the form of “process and handling fees” to physicians. The complaint also alleged that BHI waived copayments owed by certain patients who were legally required to pay for part of their tests. These alleged kickbacks were meant to induce patients and doctors as an incentive for them to choose BHI over other laboratories. Moreover, the complaint alleged that these practices resulted in medically unnecessary cardiovascular tests being charged to federal health care programs. The Anti-Kickback Statute (42 U.S. Code § 1320a–7b) prohibits offering, paying, soliciting or receiving remuneration to induce services covered by federally funded programs. The statute is intended to ensure that a physician’s medical judgment is not influenced by improper financial incentives. The statute also prohibits routinely waiving patient copayments to ensure that patients are incentivized to reject medically unnecessary tests.
“The South Carolina U.S. Attorney’s Office has dedicated considerable resources to pursuing fraud cases that divert federal taxpayer dollars from important programs, like health care and defense contracting,” said U.S. Attorney Beth Drake of the District of South Carolina. “The goal for our qui tam unit is to protect taxpayers, patients, and soldiers by ensuring that important decisions are made according to medical science and engineering, and not based on dollar signs.”
The original lawsuit was filed by Dr. Michael Mayes under the qui tam, or whistleblower, provisions of the False Claims Act. Under this act, private citizens can sue on behalf of the federal government for False Claim Act violations and share in any recovery. The United States partially intervened in this and two other actions on March 31, 2015. The remaining defendants are Latonya Mallory, the former CEO of Health Diagnostics Laboratory, Inc., and marketing company BlueWave Healthcare Consultants, Inc. and its owners, Floyd Calhoun Dent III and Robert Bradford Johnson. Dr. Mayes’ share of the settlement has not yet been determined. In 2015 the government announced settlements with two other laboratories – Health Diagnostics Laboratory Inc. of Richmond, Virginia and Singulex, Inc., of Alameda, California – for engaging in similar conduct. The settlement and the government’s intervention in the lawsuit brought forward by Dr. Mayes illustrate its ongoing efforts to combat health care fraud which began back in the Obama administration.
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). If you have chosen to disclose wrongdoing it is also advised that you contact a qui tam attorney. Qui tam attorneys can advise you on such matters and will work to protect your rights under the law.
Pacific Pulmonary Services Pays $11.4 Million to Resolve False Claims Act Allegations
The prosecution of False Claims Act violations continues under the new administration as the Department of Justice announced late last month that Braden Partners, L.P., dba Pacific Pulmonary Services (PPS), would be paying $11.4 million to resolve False Claim Act violations for submitting claims to Medicare and other healthcare programs for oxygen equipment supplied in violation of program rules. PPS – along with its general partner Teijin Pharma USA LLC – is also alleged to have supplied sleep therapy equipment as part of a cross-referral kickback scheme with sleep clinics. “This settlement demonstrates our continued pursuit of health care providers who take advantage of federal healthcare programs,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “We will investigate and take action against providers who cut corners and pay kickbacks.”
PPS – which is based in California – furnishes stationary and portable oxygen tanks and related supplies as well as sleep equipment to patients’ homes in California and other states. The government alleged that beginning in 2004, PPS began submitting claims to Medicare, TRICARE and Federal Employee Health Benefits programs for home oxygen and oxygen equipment without first obtaining physician authorization. This approval is required per program rules. Beginning in 2006, some of the company’s patient care coordinators allegedly agreed to make patient referrals to sleep testing clinics in exchange for those clinics’ agreement to refer patients to PPS for sleep therapy equipment. The government alleged that this violated the Anti-Kickback Act ((42 U.S. Code § 1320a–7b). This act prohibits offering, paying, soliciting or receiving remuneration to include referrals of items or services covered by Medicare, Medicaid and/or other federally funded programs.
“The U.S. Attorney’s Office is committed to taking all appropriate action against companies that disregard patients’ medical needs in pursuit of company profits,” said U.S. Attorney Brian J. Stretch for the Northern District of California. “Patients in federal health care programs expect and deserve medical care that is free from any undue influence and complies with the program safeguards that are in place to protect patients.” The $11.4 million settlement resolves allegations that were filed in a lawsuit by a former sales representative (Manuel Alcaine) of PPS. The case was filed in federal court in San Francisco, California. Mr. Alcaine filed his suit under the qui tam, or whistleblower, provisions of the False Claims Act which permits individuals to sue institutions on behalf of the federal government for false claims and to share in any subsequent recovery. Mr. Alcaine will receive $1.824 million of the recovered funds.
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). If you have chosen to disclose wrongdoing it is also advised that you contact a qui tam law firm. Qui tam law firms specialize in all areas related to the False Claims Act and will be able to advise you on such matters.
