In The News

California Hospital to Pay More Than $3.2 Million to Settle Allegations That It Violated the Physician Self-Referral Law

Last month, the Justice Department announced that Tri-City Medical Center (TCMC) agreed to pay more than 3 million dollars to resolve allegations that it violated the Stark Law and the False Claims Act. The government contended that TCMC violated Medicare’s prohibition on maintaining financial arrangements between hospitals and referring physicians. The Stark Law (42 U.S. Code § 1395nn) governs physician self-referral for Medicare and Medicaid patients with several enumerated exceptions.

 

“The settlement of this matter reflects not only our commitment to protect the integrity of the healthcare system through enforcement of the Stark Law, but also our willingness to work with providers who disclose their own misconduct,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. The announced settlement resolved allegations that Tri-City Medical Center maintained 97 financial arrangements with physicians and physician groups in violation of the Stark Law. TCMC identified five arrangements with its former chief of staff from 2008 until 2011 that, in the aggregate, appeared not to be commercially reasonable or for fair market value (two exceptions to the Stark Law). Moreover, TCMC identified 92 financial arrangements with community-based physicians and practice groups from 2009 until 2010 that violated the Stark Law because the written agreements were expired, missing signatures or could not be located.

 

“Together with our law enforcement partners, our agency’s investigators and attorneys will continue to work with health care providers who use the self-disclosure protocol to resolve their billing misconduct,” said Special Agent in Charge Chris Schrank of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Los Angeles region.” This settlement illustrates the government’s emphasis on combating health care fraud and prosecuting Medicare fraud cases which began as an initiative in 2009. Back then, the government established the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative. The goal of said initiative is to reduce and prevent Medicare and Medicaid financial fraud. Since January 2009, the Justice Department has recovered a total of more than $27.1 billion through False Claims Act cases, with more than $17.1 billion of that amount recovered in cases involving fraud against federal health care programs.

 

Parties that are reporting Medicare fraud and have evidence of such fraud against federal programs or contracts may file a qui tam lawsuit. They are also entitled to protection under the Whistleblower portions of the False Claims Act and may ultimately be able entitled to a portion of any settlement reached in these cases. This matter was handled by the U.S. Attorney’s Office of the Southern District of California, the Civil Division’s Commercial Litigation Branch and HHS-OIG.


URS E & C Holdings, Inc. Agrees to Pay $9 Million to Resolve False Claims Act Allegations

The Obama administration’s ongoing crackdown against businesses that are alleged to have defrauded governmental agencies continues, even reaching companies that have ties to foreign and international entities. The Justice Department announced earlier this month that URS E & C Holdings Inc., a successor to Washington Group International Inc. (WGI), agreed to pay a $9 million settlement to resolve charges that it submitted false claims related to United States Agency for International (USAID) contracts. “This settlement protects the integrity of the federal procurement process.  Whether a situation involves procurement fraud, as in this case, or healthcare fraud or any other type of fraud and dishonesty, the U.S. Attorney’s Office for the District of Idaho seeks to hold those obtaining public funds accountable,” said U.S. Attorney Wendy J. Olson for the District of Ohio.

 

The settlement involved USAID funded contracts for water and wastewater infrastructure projects in Egypt in the 1990s. The government alleged that a contract awarded between WGI, Contrack International and Misr Sons Development S.A.E. (HAS) – an Egyptian company was – violated the law because the partnership concealed from USAID the fact that these companies were in fact acting as partners. The government went on to allege that since HAS’s involvement in particular was not revealed – as is a precondition for the awarding of this contract – it prevented USAID from evaluating the partnership’s qualifications and eligibility.

 

As a result of these actions, the Justice Department maintained that WGI and its partners allegedly received USAID-funded contracts for which they were ineligible. The United States filed suit under the False Claims Act and the Foreign Assistance Act alleging that this union filed false claims. The settlement, while it resolved WGI’s liability, does not resolve claims the government has made against HAS. The government continues to pursue charges against HAS. The settlement was the result of a coordinated effort by the Department of Justice, Civil Division, Commercial Litigation Branch; the U.S. Attorney’s Office for the District of Idaho; and the USAID Office of Inspector General. Persons, who feel they are entitled to whistleblower protection, should seek out the counsel of a qui tam attorney.  A False Claims Act lawyer can advise you as to what rights you have under the law, what award you may be entitled to if any and how to protect your interest.


Novum Structures LLC to Plead Guilty and Pay $3 Million to Resolve Criminal and Civil Claims

The US government appears to be resolute in its attempt to protect US economic interest when it comes to the outsourcing of foreign materials for federally funded construction projects. Earlier this month, the Justice Department announced that Novum Structures, LLC (Novum) agreed to plead guilty and to pay $3 million to resolve criminal and civil charges that it improperly used foreign materials on construction projects involving federal funds. Moreover, the government alleged that Novum used these materials in violation of the government’s “Buy America” requirements. (The Wisconsin based company had a contractual obligation to implement various domestic preference re the use of materials on constructions projects.)

The agreement resolved allegations that Novum repackaged materials and falsified documents relating to federally funded construction projects in order to hide the fact that the materials were of foreign origin in violation of the “Buy America” requirements. Novum plead guilty to violating 18 U.S.C. § 1001 and agreed to pay a $500,000 criminal fine. “Domestic preference statutes are designed to promote American businesses and to protect U.S. economic interests,” said Acting U.S. Attorney Gregory J. Haanstad for the Eastern District of Wisconsin. “When companies subvert those interests by violating ‘Buy American’ provisions – and when they undertake efforts to conceal that they have done so – all in an effort to improperly advance their own private financial interests, the U.S. Attorney’s Office will pursue all appropriate criminal and civil sanctions.”

 

Novum also agreed to pay $2.5 million to solve allegations under the False Claims Act that its conduct caused the submission of false claims regarding the origin of non-compliant construction material to federally funded projects. The activities are alleged to have occurred from Jan. 1, 2004 through July 11, 2013. Construction projects funded by the U.S. government are generally subject to laws requiring the use of domestic materials. (See Buy American Act and § 1605 of the American Recovery and Reinvestment Act.) “Contractors must follow all federal contracting rules when doing business with the United States,” said General Services Administration Inspector General Carol Fortine Ochoa.

 

The allegations resolved by the civil settlement were brought by whistleblower Brenda King under provision of the False Claims Act. The act permits private parties to file a qui tam lawsuit on behalf of the government against those who falsely try to receive federal funds. King is scheduled to receive a $400,000 award as part of the civil settlement. If you are a whistleblower involved in a False Claims action, you should consult with a False Claims Act attorney who can advise you on your rights under this act and determine if you are entitled to whistleblower rewards. The U.S. Attorney’s Office for the Eastern District of Wisconsin prosecuted the criminal case, and also jointly handled the civil lawsuit with the Civil Division’s Commercial Litigation Branch. The lawsuit is captioned United States ex rel. King v. Novum Structures, LLC, Case No. 12-cv-860 (E.D. Wis.)


Hospital Chain HCA Inc. Pays $16.5 Million to Settle False Claims Act Allegations Regarding Chattanooga, Tennessee Hospital

Back in 2012 HCA Inc., agreed to pay the United States and the state of Tennessee $16.5 million to settle claims that it had violated the False Claims Act and the Stark Statute. At the time, the Justice Department alleged that during 2007 HCA – through its subsidiaries Parkridge Medical Center and HCA Physician Services – entered into a series of transactions with Diagnostic Associates of Chattanooga (DCA) for which it provided financial benefits to DCA for referring its patients to HCA-owned facilities. These financial transactions included rental payments for office space leased from Diagnostic at a rate in excess of fair market value. The government further alleged that this was done in order to help DCA members meet their mortgage.

The government alleged that these transactions violated the Stark Statue (42 USC § 1395nn) which prohibits physician referrals of designated health services for Medicare and Medicaid patients if the physician (or an immediate family member) has a financial relationship with that entity. “Physicians should make decisions regarding referrals to health care facilities based on what is in the best interest of patients without being induced by payments from hospitals competing for their business,” said Bill Killian, U.S. Attorney for the Eastern District of Tennessee.

Current Status: As of 2015 the case – United States ex rel. Thomas Bingham v. HCA, Inc., No. 1:13-cv-23671 (S.D. Fla.) – remained open and unsealed in part. The civil settlement resolved the lawsuit, under the qui tam, or whistleblower, provisions of the False Claims Act, which allows private citizens to file a qui tam lawsuit on behalf of the United States and share in any recovery as a “False Claims Act whistleblower in the case was scheduled to receive an 18.5% share of that amount.

Also as part of the settlement, Parkridge Medical Center entered into a comprehensive five-year agreement with the U.S. Department of Health and Human Services to ensure its continued compliance with federal health care benefit program requirements. This resolution is part of the government’s emphasis on combating health care fraud which was announced by then Attorney General Eric Holder and Kathleen Sebelius, former Secretary of the Department of Health and Human Services back in May 2009.


Southington, Connecticut Dentist Agrees to Plead Guilty to Medicaid Fraud and Pay $55 Thousand to Settle Alleged False Claims Act Violations

Individuals have certainly not been unrepresented when it comes to the Federal government’s recent crackdown recent on Medicaid and Medicare fraud cases. Case in point: A Southington, Connecticut dentist – Dr. Thomas DeRienzo – has agreed to pay $55 thousand to resolve the violations of the False Claims Acts filed against him by The Attorney General’s office. DeRienzo – owner of Plantsville Family Dental – is alleged to have billed Medicaid for procedures that were either not needed or for which he had “upcoded”. (Upcoding is when an incorrect billing code is assigned to a medical procedure to increase the reimbursement amount.)

The incidences are alleged to have occurred between January 2010 and August 2014. In August of 2014, DeRienzo was charged with first-degree larceny by defrauding a public community, second-degree vendor fraud and insurance fraud. These charges are still pending in Hartford Superior Court and the case has been ordered sealed. Attorney General George Jepsen said in a statement. “By bringing state False Claims Act cases such as this, we recover funds obtained through fraud and deter others from attempting similar schemes.”

The case was part of the state’s Interagency Fraud Task Force, which was created in July 2013 to proactively investigate healthcare fraud. The Obama administration has spearheaded a larger crackdown on Medicaid and Medicare fraud with an initiative that has been active since 2009 and which has recovered over $3.5 billion from False Claims Act cases in the fiscal year of 2015. Persons, who feel they are entitled to Medicare fraud whistleblower protection, should seek out the counsel of a qui tam lawyer.


Justice Department Recovers Over $3.5 Billion from False Claims Act Cases in Fiscal Year 2015

It looks like the government’s crackdown on fraud has been a resounding success this year. According to the Department of Justice, it has obtained more than $3.5 billion in settlements and judgments in cases involving fraud and false claims during the fiscal year, which ended on September 30, 2015. This year’s successful prosecutions are not isolated. According to Deputy Assistant Attorney General Benjamin C. Mizer this is the fourth straight year that the government has exceeded 3.5 billion in cases under the False Claims Act.

The recovered $3.5 billion came from a variety of companies and individuals for offenses ranging from allegedly providing unnecessary or inadequate care, paying kickbacks to health care providers to induce the use of certain goods and services, or overcharging for goods and services paid for by Medicare, Medicaid, and other federal health care programs. The largest recovery was in the area of governmental contracts; this amount exceeded $1.1 billion.

The False Claims Act is the government’s primary civil remedy to redress false claims for government funds and property under government contracts. In 1986, Congress strengthened the Act by amending it to increase incentives for whistleblowers to file lawsuits on behalf of the government. Most false claims actions are filed under the Federal Whistleblower Act, which allows individuals to file lawsuits alleging false claims on behalf of the government. Whistleblowers filed 638 qui tam law suits (also known as The Whistleblower Law) in fiscal year 2015 and were awarded a total of $597 million.

Health Care Fraud

Including this past year’s $1.9 billion, the department has recovered nearly $16.5 billion in health care fraud, including Medicare fraud cases, since January 2009 to the end of fiscal year 2015. The recovery of this money is the result of the government’s crackdown on fraud, which began in 2009.

Money recovered from companies alleged to have committed healthcare fraud includes:

  • DaVita Partners, Inc. paid 450 million for allegedly administering the drugs Zemplar and Venofer to dialysis patients and then billing the government for costs that could have been avoided and for violating the False Claims Act by paying for kickbacks.
  • A cardiac nurse filed a qui tam lawsuit against 500 Hospitals for implanting cardiac devices in their patients in violation of policies and standards established by Medicare and Medicaid. As a result, $216 million was recovered this year.
  • Adventist Health System. North Broward Hospital District and Columbus Regional Healthcare System and Dr. Andrew Pippas were charged with violations of the Stark Law. Recoveries in those cases were $115 million, $69.5 million and $25 million respectively.
  • Daiichi Sankyo Inc. paid $39 million to resolve allegations of false claims against the US for paying kickbacks.
  • AstraZeneca LP and Cephalon Inc. paid $31 million in settlements.
  • PharMerica Corp. paid $9.25 million.
  • Extendicare Health Services Inc. paid $32.3 million as a part of the government crackdown on Medicare fraud cases.

Housing and Mortgage Fraud

The department has recovered over $5 billion in housing and mortgage fraud from January 2009 to the end of fiscal year 2015, including this past year’s recoveries of $365 million. Notable recoveries include:

  • First Tennessee Bank, N.A. $212.5 million settlement. They were alleged to have originated and endorsed mortgages that did not meet eligibility requirements.
  • MetLife paid $123.5 million to resolve liability under the False Claims Act arising from its misconduct in endorsing mortgagees for FHA insurance.
  • Walter Investment Management Corp. paid a $29.63 million settlement for false claims involving the servicing of reverse mortgages.

Government Contracts

Government contracts and federal procurement accounted for $1.1 billion in fraud settlements and judgments in fiscal year 2015, bringing procurement fraud totals to nearly $4 billion from January 2009 to the end of the fiscal year. Notable recoveries include:

Other Fraud Recoveries and Actions

The government pursued fraud allegations in a variety of industries during 2015 and made significant recoveries. Notable recoveries include:

  • Fireman’s Fund Insurance Company paid a $44 million settlement for alleged fraud under the U.S. Department of Agriculture’s federal crop insurance program.
  • Education Affiliates paid a $13 million settlement for alleged false claims it made to the Department of Education for student aid for students whose qualifications for admission were falsified.
  • The estate and trusts of the late Layton P. Stuart, former owner and president of One Financial Corporation, and its operating subsidiary, One Bank & Trust N.A., paid $4 million for allegations that it fraudulently secure TARP funds.
  • Air Ideal Inc. paid $250,000 plus five percent of Air Ideal’s gross revenues for five years for allegations that it fraudulently-procured HUBZone certification to obtain contracts from the Coast Guard, et al.

Holding Individuals Accountable

On Sept. 9, Deputy Attorney General Sally Quillian Yates issued a memorandum on individual accountability for corporate wrongdoing. These individuals are alleged to have committed offenses in violation of the False Claims Act. Notable recoveries in these cases include:

  • Two Florida couples agreed to pay the United States $1.137 million to settle allegations of accepting kickbacks in exchange for home health care referrals to A Plus Home Health Care Inc.
  • Dr. Charles Denham agreed to pay $1 million to settle allegations that he solicited and accepted kickbacks from CareFusion.
  • Dr. Asad Qamar and his practice, the Institute for Cardiovascular Excellence PLLC, alleging that Qamar and his practice billed Medicare for medically unnecessary peripheral artery procedures and paid kickbacks.
  • H. Ted Cain, Julie Cain, Corporate Management Inc. and Stone County Hospital Inc. for false claims for Medicare reimbursement. This case is ongoing.
  • Frank Dinsmore, CEO of EDF Resource Capital Inc agreed to pay $200,000 to settle false claims allegations.

Recoveries in Whistleblower Suits

Of the $3.5 billion the government recovered in fiscal year 2015, more than $2.8 billion was related to lawsuits filed under the qui tam provisions of the False Claims Act. “Many of the recoveries obtained under the False Claims Act result from courageous men and women who come forward to blow the whistle on fraud they are often uniquely positioned to expose,” said Principal Deputy Assistant Attorney General Mizer. The government’s claims in the matters described above are allegations only; except where indicated, there has been no determination of liability


Warner Chilcott Agrees to Plead Guilty to Felony Health Care Fraud Scheme and Pay $125 Million to Resolve Criminal Liability and False Claims Act Allegations

Last October, Warner Chilcott U.S. Sales LLC agreed to plead guilty to health care fraud against the U.S. Government. According to the U.S. Justice Department, Chilcott – which is a subsidiary of pharmaceutical manufacturer Warner Chilcott PLC – agreed to pay a $125 million settlement to resolve the charge. The charges were that it illegally marketed the drugs Actonel, Asacol, Atelvia, Doryx, Enablex, Estrace and Loestrin. Several other individuals also pled guilty or were charged in connection with the company’s activities. Some of those charges were criminal in nature.

Warner Chilcott pled guilty to criminal charges that the company committed felony violations when it:

 

  • Paid kickbacks to physicians inducing them to prescribe its drugs.
  • Manipulated prior authorizations to persuade insurance companies to pay for Atelvia® which insurers might not have otherwise paid for.
  • Made unsubstantiated claims for the drug Actonel®

 

The indictment – which was unsealed in the District of Massachusetts on October 29, 2015 – charged Warner Chilcott former President, W. Carl Reichel, with conspiring to pay kickbacks to physicians. Reichel had been arrested earlier that day and had made an initial court appearance before a U.S. District Court judge. “The Department will continue to hold companies and responsible individuals accountable when they use improper incentives, like those alleged here, to promote their products,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer.

The government charged that between 2009 and 2013, Warner Chilcott’s management team, knowingly and willfully paid remuneration to physicians in order to induce those physicians to prescribe Warner Chilcott drugs. (It is illegal to offer or pay remuneration to physicians to induce them to refer individuals to pharmacies for the dispensing of drugs for which payments are made in whole or in part under a federal health care program.)

The government further alleged that Warner Chilcott employees, at the direction of company management, provided payments, meals and other remuneration associated with so-called “Medical Education Events.” These events often contained no educational information and were used to pay prescribing physicians to gain an advantage over other companies. Warner Chilcott also used high-prescribing physicians as “speakers” for the company who did not actually speak on clinical topics. Instead, Chilcott threatened the physicians’ pay if they did not change their prescription habits.

In addition, the government alleged that from 2011 to 2013, Warner Chilcott employees knowingly submitted false, inaccurate, or misleading prior authorization requests to federal health care programs for Atelvia and Actonel. This misleading information was given to certain insurance companies in order to overcome restrictions that favored less expensive drugs. In some cases, sales representatives coached physicians and staff about which medical justifications would result in an approved prior authorization, whether or not the justification was true for a specific patient.

Finally, the information showed that Warner Chilcott employees were instructed by members of the company’s management team to make unsubstantiated superiority claims when marketing the drug Actonel. Warner Chilcott management directed the sales representatives to make the superiority claim even though such claims were not supported by clinical evidence. Under the terms of the plea agreement, Warner Chilcott will pay a criminal fine of $22.94 million and $102.06 million in a civil settlement agreement to resolve charges that it violated the Anti-Kickback. The federal share of the civil settlement is approximately $91.5 million, and the state Medicaid share of the civil settlement is approximately $10.6 million.

Two former Warner Chilcott district managers, Jeffrey Podolsky and Timothy Garcia previously pleaded guilty of conspiracy to commit health care fraud and violations of the Health Insurance Portability and Accountability Act (HIPAA). A third former district manager, Landon Eckles, was criminally charged in October of this year for alleged HIPAA violations relating to the alleged prior authorization scheme. Rita Luthra, M.D., was charged with accepting free meals and speaker fees from Warner Chilcott in return for prescribing its drugs.

The civil settlement resolved a lawsuit filed under the whistleblower provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims, to share in any recovery and to receive whistleblower protection. The civil lawsuit was filed in the District of Massachusetts and is captioned United States ex rel. Alexander, et al. v. Warner Chilcott plc, et al., Civil Action No. 11-CA-1121 (D. Mass.). As part of the resolution, the whistleblowers will receive approximately $22.9 million from the federal share of the civil recovery.

This settlement illustrates the government’s continuing prosecution of Medicare fraud cases. Since January 2009, the Justice Department has recovered a total of more than $26.2 billion through False Claims Act cases, with more than $16.4 billion of that amount recovered in cases involving fraud against federal health care programs. Persons who feel they are entitled to whistleblower protection can file a qui tam law suit.


Bollinger Shipyards Agrees to Settle False Claims Act Suit

We’ve seen some False Claims Act cases in the news that have been very impactful on various governmental agencies and private companies, but the following case is especially troubling. It involves a charge of fraud that affects a major branch of the US armed forces – the Coast Guard – and the functionality of its military vessels. Back in August of 2011, the US Justice Department filed suit against Bollinger Shipyards Lockport LLC and Halter Bollinger Joint Venture LLC, alleging that they had made false statements to the Coast Guard for the purpose of securing a contract to modify the design of several ships.

It was the government’s charge at that time that Bollinger – back in 2002 – had proposed converting the Coast Guard’s existing 110-FT Patrol Boats (WPDs) into 123-Ft WPBs by extending their hulls and making additional modifications. The government alleged that Bollinger misrepresented the hull or longitudinal strength of the converted vessels in order to secure a contract to convert eight more Coast Guard cutters. The Justice Department also said that Bollinger’s fraudulent activity included failing to follow other quality control procedures that were mandated by their contract.

As a result the first cutter, the Matagorda, suffered hull failure when it was put into service. The modifications Bollinger made to the other vessels caused them to be unseaworthy as well. Attempts to repair the vessels were unsuccessful and these ships were eventually taken out of service. In December of this year, Bollinger finally agreed to pay the United States $8.5 million and to release contract claims to settle this False Claims action filed against it back in 2011.

The case was handled by both the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office of the Eastern District of Louisiana. If you are the defendant in a qui tam law suit, you are advised to hire a False Claims Act attorney who has the expertise to counsel you in this area of the law.


Netcracker Technology Corp. and Computer Sciences Corp. Agree to Settle Civil False Claims Act Allegations

The government’s crackdown on fraud under the False Claims Act continues unabated. Two governmental contractors – Netcracker Technology Corp (NTC) and Computer Sciences Corp (CSC) – have agreed to pay the government a total of $12.75 million to resolve allegations under the False Claims Act claiming that both companies used individuals who did not have security clearance on a Defense Information Systems Agency (NISA) contract. NTC – headquartered in Waltham, Mass – has agreed to pay $11.4 million and CSC – headquartered in Falls Church, Virginia – has agreed to pay $1.35 million. Specifically, the government alleges that from 2008 through 2013 Netcracker used employees who it knew did not have security clearance to perform work it knew required clearance in compliance with DISA and government regulations. The government further alleges that CSC then recklessly submitted those false claims for payment to DISA. Netcracker – a government contractor- and CSC – a subcontractor – implemented software used to help manage the telecommunications network used by the U.S. Department of Defense.

Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division and U.S. Attorney Channing D. Phillips of the District of Columbia both stated the government’s need to maintain the integrity of the procurement process by pursuing violations of the False Claims Act. In recent months the US government has been aggressively cracking down on companies that are alleged to have defrauded the government. Since January 2009, the Justice Department has recovered more than $25.3 billion through False Claims Act cases.

The settlement by NTC and CSC resolves a lawsuit filed under the whistleblower act provision of the False Claims Act; whistleblower lawsuits are also referred to as Qui tam law suits. The law permits parties who file under this section of the False Claims Act to obtain a portion of the government’s recovery. John Kingsley, a former Netcracker employee who informed on his company’s practices, is entitled to and will receive a whistleblower reward of $2,358,750. The resolution in this matter was the result of a joint effort between the U.S. Attorney’s Office of the District of Columbia, the Civil Division’s Commercial Litigation branch and the DISA IG Office


Millennium Health Agrees to Pay $256 Million to Resolve Allegations of Unnecessary Drug and Genetic Testing and Illegal Remuneration to Physicians

Millennium Health agreed to pay the government $256 million to resolve allegations that it defrauded Medicare, Medicaid and other federal programs by billing them for medically unnecessary genetic and urine tests. Millennium, headquartered in San Diego, is one of the largest urine drug testing laboratories in the United States.

On October, 19 – as part of an announced settlement – Millennium agreed to pay $227 million to resolve these allegations under the False Claims Act, which imposes liability on persons and companies who defraud governmental programs. The government alleged that from January 1, 2008 through May 20, 2015 Millennium prompted physicians to order an excessive amount of urine drug tests for patients that were medically unnecessary for the treatment or diagnosis of individual patient’s illness or injury. The tests were done through promotion of “customer profiles” which instead of being tailored to individual patients were in effects orders to physicians to conduct these unnecessary tests. The tests, the government alleged, were not based on necessity but instead were conducted for the sole purpose of billing Medicare, Medicaid and other federal health programs. The practice violated federal rules limiting payment to services that are medically necessary for the treatment and diagnosis of patient illness or injury.

The government further alleged that Millennium’s free point of care urine test cups to physicians – which it conditioned on the physician’s agreement to return to Millennium for hundreds of dollars worth of additional testing – violated both the Stark Law and the Anti-Kickback Statute. The Stark Law (named for United States Congressman Pete Stark (D-CA) who sponsored the bill) and the Anti-Kickback Statute prohibit laboratories from giving physicians anything of value in exchange for referrals of tests.

Millennium also agreed to pay $10 million to resolve charges under the False Claims Act that from January 1, 2012 through May 20, 2012 it submitted false claims that were as a result of medically unnecessary genetic testing. Additionally, Millennium as part of a corporate integrity agreement it has entered due to the settlement, agreed to pay $19.2 million to the Centers for Medicare and Medicaid Services (CMS) to resolve administrative actions related to Millennium’s urine drug test billing practices.

Originally the False Claims Act allegations were brought about in a qui tam law suit. The qui tam provision of the False Claims Act is commonly referred to as the whistleblower law. The law allows for private parties to bring suit on the behalf of the government and to share in any recovery. Whistleblowers rewards in this case will total $31.83 million.

Medicare fraud cases have been in the spotlight recently due to increased scrutiny from the Justice Department. Since January 2009, the Justice Department has recovered more than $25.3 billion through False Claims Act cases. More than $16.2 billion of that amount has been recovered in cases involving fraud against federal health care programs. The investigation was spearheaded by the government’s Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative.

The investigation was conducted by the Civil Division’s Commercial Litigation branch, the U.S. Attorney’s Office of the District of Massachusetts, HHS-OIG and HHS’ Office of the General Counsel, CMS, the Office of Personnel and Management Office of Inspector General, the U.S. Postal Service Office of Inspector General, the Department of Veterans Affairs and the FBI.