FROM: U.S. JUSTICE DEPARTMENT
Wednesday, June 24, 2015
DaVita to Pay $450 Million to Resolve Allegations That it Sought Reimbursement for Unnecessary Drug Wastage
DaVita Healthcare Partners, Inc., the largest provider of dialysis services in the United States, has agreed to pay $450 million to resolve claims that it violated the False Claims Act by knowingly creating unnecessary waste in administering the drugs Zemplar and Venofer to dialysis patients, and then billing the federal government for such avoidable waste. Davita is headquartered in Denver, Colorado, and has dialysis clinics in 46 states and the District of Columbia.
“This settlement is an example of what can be accomplished as a result of the successful cooperation between the government and whistleblowers in protecting our vital federal health care programs,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.
This civil settlement resolves allegations brought in a whistleblower action that DaVita devised and employed dosing grids and/or protocols specifically designed to create unnecessary waste of the drugs Venofer and Zemplar. These drugs are packaged in single-use vials, which are intended for one-time use. Sometimes, the amount of the drug in the vials does not match the dosage specified by the physician, resulting in the remainder of the drug in the vial being discarded.
At the time of the alleged scheme, Medicare would reimburse a dialysis provider for certain waste if the dialysis provider – acting in good faith – discarded the remainder of the drug contained in a single-use vial after administering the requisite dose and/or quantity of the drug to a Medicare patient.
The whistleblowers’ complaint alleged that, to create unnecessary Zemplar waste, DaVita required its employees to provide Zemplar to dialysis patients pursuant to mandatory and wasteful “dosing grids.” Zemplar, a Vitamin D supplement usually administered at every dialysis session, is packaged in single-use vial sizes of 2 mcg, 5 mcg, and 10 mcg. Davita allegedly created unnecessary waste by requiring its employees to provide Zemplar to dialysis patients pursuant to mandatory “dosing grids,” which were designed to maximize the amount of Zemplar administered to patients. DaVita then allegedly billed the government not only for the amount of Zemplar administered to patients, but also for the amount “wasted.”
With regard to Venofer, an iron supplement packaged only in a single-use vial size of 100 mg during the relevant time period, DaVita allegedly enacted protocols that required nurses to administer this drug in small amounts, and at frequent intervals, to maximize wastage. For instance, in certain instances, DaVita’s protocol called for a patient to receive 25 mg of Venofer per week, which resulted in 300 mg of waste per month that was billed to the Government. In contrast, if the order had been filled by giving the patient the entirety of a single 100 mg vial, once per month, no waste would have resulted.
In 2011, the Centers for Medicare and Medicaid Services changed the manner by which it reimbursed dialysis providers for such drugs. As a consequence, wastage derived from single-use vials was no longer profitable, and, as a result, DaVita allegedly changed its practices and reduced its drug wastage dramatically.
“Through personal sacrifice and courage, two whistleblowers exposed knowingly wasteful dosing practices designed simply to increase profits and improperly drain the government’s resources,” said Acting U.S. Attorney John Horn of the Northern District of Georgia. “This settlement returns hundreds of millions of dollars to the treasury that had been improperly obtained by DaVita through these wasteful practices.”
The allegations resolved today arose from a lawsuit filed and ultimately litigated to this succesful resolution by two whistleblowers, Dr. Alon Vanier and nurse Daniel Barbir, under the qui tam provisions of the False Claims Act. Under the Act, private citizens can bring suit on behalf of the government for false claims and share in any recovery. The United States may intervene in the action or, as in this case, the whistleblower may pursue the matter.
This case was monitored by the U.S. Attorney’s Office of the Northern District of Georgia and the Civil Division’s Commercial Litigation Branch.
Showing posts with label FALSE CLAIMS ACT. Show all posts
Showing posts with label FALSE CLAIMS ACT. Show all posts
Friday, June 26, 2015
Tuesday, June 16, 2015
CHILDREN'S HOSPITAL SETTLES FALSE CLAIMS ACT ALLEGATIONS; WILL PAY $12.9 MILLION
FROM: U.S. JUSTICE DEPARTMENT
Monday, June 15, 2015
Children's Hospital to Pay $12.9 Million to Settle False Claims Act Allegations
Children’s Hospital, Children’s National Medical Center Inc. and its affiliated entities (collectively CNMC) have agreed to pay $12.9 million to resolve allegations that they violated the False Claims Act by submitting false cost reports and other applications to the components and contractors of the Department of Health and Human Services (HHS), as well as to Virginia and District of Columbia Medicaid programs, the Department of Justice announced today. CNMC is based in Washington, D.C., and provides pediatric care throughout the metropolitan region.
“The false reporting alleged in today’s settlement deprived the Medicare Trust Fund of millions of taxpayers’ dollars,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “Such conduct wastes critical federal health care program funds and drives up the costs of health care for all of us.”
“The integrity of federal health care programs depends on honest and accurate reporting from the hospitals and other health care providers that receive hundreds of billions of tax dollars every year,” said Acting U.S. Attorney Vincent H. Cohen Jr. of the District of Columbia. “This settlement demonstrates our commitment to defending the integrity of the system and ensuring that taxpayer money goes to meet the most critical health care needs. We will continue to work with whistleblowers like the former employee who came forward in this case to battle waste, fraud and abuse that fuel the skyrocketing cost of health care.”
According to the settlement agreement, CNMC misstated information on cost reports and applications in two distinct manners to HHS. This false information was used by HHS and Medicaid programs to calculate reimbursement rates to CNMC. The United States contended that CNMC misreported its available bed count on its application to HHS’ Health Resources and Services Administration under the Children’s Hospitals Graduate Medical Education (CHGME) Payment Program. The CHGME Payment Program provides federal funds to freestanding children’s hospitals to help them maintain their graduate medical education programs that train pediatric and other residents. The United States further contended that CNMC filed cost reports misstating their overhead costs, resulting in overpayment from Medicare and the Virginia and District of Columbia Medicaid programs.
The settlement resolves allegations brought in a lawsuit filed under the qui tam or whistleblower provisions of the False Claims Act by James A. Roark Sr., a former employee of CNMC. Under the act, a private citizen can sue on behalf of the United States and share in any recovery. The United States is entitled to intervene in the lawsuit, as it did here. As part of the resolution, Mr. Roark will receive $1,890,649.98.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 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 Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $24.3 billion through False Claims Act cases, with more than $15.3 billion of that amount recovered in cases involving fraud against federal health care programs.
This matter was handled by the U.S. Attorney’s Office of the District of Columbia with assistance from the Civil Division’s Commercial Litigation Branch and the HHS’ Office of Inspector General.
Monday, June 15, 2015
Children's Hospital to Pay $12.9 Million to Settle False Claims Act Allegations
Children’s Hospital, Children’s National Medical Center Inc. and its affiliated entities (collectively CNMC) have agreed to pay $12.9 million to resolve allegations that they violated the False Claims Act by submitting false cost reports and other applications to the components and contractors of the Department of Health and Human Services (HHS), as well as to Virginia and District of Columbia Medicaid programs, the Department of Justice announced today. CNMC is based in Washington, D.C., and provides pediatric care throughout the metropolitan region.
“The false reporting alleged in today’s settlement deprived the Medicare Trust Fund of millions of taxpayers’ dollars,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “Such conduct wastes critical federal health care program funds and drives up the costs of health care for all of us.”
“The integrity of federal health care programs depends on honest and accurate reporting from the hospitals and other health care providers that receive hundreds of billions of tax dollars every year,” said Acting U.S. Attorney Vincent H. Cohen Jr. of the District of Columbia. “This settlement demonstrates our commitment to defending the integrity of the system and ensuring that taxpayer money goes to meet the most critical health care needs. We will continue to work with whistleblowers like the former employee who came forward in this case to battle waste, fraud and abuse that fuel the skyrocketing cost of health care.”
According to the settlement agreement, CNMC misstated information on cost reports and applications in two distinct manners to HHS. This false information was used by HHS and Medicaid programs to calculate reimbursement rates to CNMC. The United States contended that CNMC misreported its available bed count on its application to HHS’ Health Resources and Services Administration under the Children’s Hospitals Graduate Medical Education (CHGME) Payment Program. The CHGME Payment Program provides federal funds to freestanding children’s hospitals to help them maintain their graduate medical education programs that train pediatric and other residents. The United States further contended that CNMC filed cost reports misstating their overhead costs, resulting in overpayment from Medicare and the Virginia and District of Columbia Medicaid programs.
The settlement resolves allegations brought in a lawsuit filed under the qui tam or whistleblower provisions of the False Claims Act by James A. Roark Sr., a former employee of CNMC. Under the act, a private citizen can sue on behalf of the United States and share in any recovery. The United States is entitled to intervene in the lawsuit, as it did here. As part of the resolution, Mr. Roark will receive $1,890,649.98.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 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 Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $24.3 billion through False Claims Act cases, with more than $15.3 billion of that amount recovered in cases involving fraud against federal health care programs.
This matter was handled by the U.S. Attorney’s Office of the District of Columbia with assistance from the Civil Division’s Commercial Litigation Branch and the HHS’ Office of Inspector General.
Wednesday, June 3, 2015
BANK TO PAY OVER $212 MILLION TO RESOLVE FALSE CLAIMS ACT ALLEGED VIOLATIONS
FROM: U.S. JUSTICE DEPARTMENT
Monday, June 1, 2015
First Tennessee Bank N.A. Agrees to Pay $212.5 Million to Resolve False Claims Act Liability Arising from FHA-Insured Mortgage Lending
First Tennessee Bank N.A. has agreed to pay the United States $212.5 million to resolve allegations that it violated the False Claims Act by knowingly originating and underwriting mortgage loans insured by the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) that did not meet applicable requirements, the Justice Department announced today. First Tennessee is headquartered in Memphis, Tennessee.
“First Tennessee’s reckless underwriting has resulted in significant losses of federal funds and was precisely the type of conduct that caused the financial crisis and housing market downturn,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “We will continue to hold accountable lenders who put profits before both their legal obligations and their customers, and restore wrongfully claimed funds to FHA and the treasury.”
Between January 2006 and October 2008, First Tennessee, through its subsidiary First Horizon Home Loans Corporation (First Horizon), participated in the FHA insurance program as a Direct Endorsement Lender (DEL). As a DEL, First Tennessee had the authority to originate, underwrite and endorse mortgages for FHA insurance. If a DEL such as First Tennessee approves a mortgage loan for FHA insurance and the loan later defaults, the holder of the loan may submit an insurance claim to HUD, FHA’s parent agency, for the losses resulting from the defaulted loan. Under the DEL program, neither the FHA nor HUD reviews a loan before it is endorsed for FHA insurance. DELs such as First Tennessee are therefore required to follow program rules designed to ensure that they are properly underwriting and certifying mortgages for FHA insurance, to maintain a quality control program that can prevent and correct deficiencies in their underwriting practices and to self-report any deficient loans identified by their quality control program. In August 2008, First Tennessee sold First Horizon to MetLife Bank N.A. (MetLife), a wholly-owned subsidiary of MetLife Inc., which thereafter originated FHA-insured mortgages under the MetLife name. In February 2015, MetLife agreed to pay $123.5 million to resolve its False Claims Act liability arising from its FHA originations after it acquired First Horizon from First Tennessee.
“First Tennessee admitted failings that resulted in poor quality FHA loans,” said Acting U.S. Attorney John A. Horn of the Northern District of Georgia. “While First Tennessee profited from these loans, taxpayers incurred substantial losses when the loans defaulted. The settlement, as well as the investigation that preceded it, illustrates that the Department of Justice will closely scrutinize entities that cause financial injury to the government, and, in turn, the American taxpayer.”
The settlement announced today resolves allegations that First Tennessee failed to comply with FHA origination, underwriting and quality control requirements. As part of the settlement, First Tennessee admitted to the following facts: From January 2006 through October 2008, it repeatedly certified for FHA insurance mortgage loans that did not meet HUD underwriting requirements. Beginning in late 2007, First Tennessee significantly increased its FHA originations. The quality of First Tennessee’s FHA underwriting significantly decreased during 2008 as its FHA lending increased. Beginning no later than early 2008, First Tennessee became aware that a substantial percentage of its FHA loans were not eligible for FHA mortgage insurance due to its own quality control findings. These findings were routinely shared with First Tennessee’s senior managers. Despite internally acknowledging that hundreds of its FHA mortgages had material deficiencies, and despite its obligation to self-report findings of material violations of FHA requirements, First Tennessee failed to report even a single deficient mortgage to FHA. First Tennessee’s conduct caused FHA to insure hundreds of loans that were not eligible for insurance and, as a result, FHA suffered substantial losses when it later paid insurance claims on those loans.
“Our investigation found that First Tennessee caused FHA to pay claims on loans that the bank never should have approved and insured in the first place,” said HUD Inspector General David A. Montoya. “This settlement reinforces my commitment to combat fraud in the origination of single family mortgages insured by the FHA and makes certain that only qualified, creditworthy borrowers who can repay their mortgages are approved under the FHA program.”
“We are pleased that First Tennessee has acknowledged facts that demonstrate its failure to comply with HUD’s requirements and has agreed to settle with the government,” said HUD General Counsel Helen Kanovsky. “We thank the Department of Justice and HUD’s Office of Inspector General for all of their efforts in helping us to make this settlement a reality. We hope this agreement sends a message to those lenders with whom we do business that HUD takes compliance very seriously and so should they.”
The investigation of the allegations in the government’s complaint was a coordinated effort between the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the Northern District of Georgia, HUD and HUD’s Office of Inspector General.
Monday, June 1, 2015
First Tennessee Bank N.A. Agrees to Pay $212.5 Million to Resolve False Claims Act Liability Arising from FHA-Insured Mortgage Lending
First Tennessee Bank N.A. has agreed to pay the United States $212.5 million to resolve allegations that it violated the False Claims Act by knowingly originating and underwriting mortgage loans insured by the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) that did not meet applicable requirements, the Justice Department announced today. First Tennessee is headquartered in Memphis, Tennessee.
“First Tennessee’s reckless underwriting has resulted in significant losses of federal funds and was precisely the type of conduct that caused the financial crisis and housing market downturn,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “We will continue to hold accountable lenders who put profits before both their legal obligations and their customers, and restore wrongfully claimed funds to FHA and the treasury.”
Between January 2006 and October 2008, First Tennessee, through its subsidiary First Horizon Home Loans Corporation (First Horizon), participated in the FHA insurance program as a Direct Endorsement Lender (DEL). As a DEL, First Tennessee had the authority to originate, underwrite and endorse mortgages for FHA insurance. If a DEL such as First Tennessee approves a mortgage loan for FHA insurance and the loan later defaults, the holder of the loan may submit an insurance claim to HUD, FHA’s parent agency, for the losses resulting from the defaulted loan. Under the DEL program, neither the FHA nor HUD reviews a loan before it is endorsed for FHA insurance. DELs such as First Tennessee are therefore required to follow program rules designed to ensure that they are properly underwriting and certifying mortgages for FHA insurance, to maintain a quality control program that can prevent and correct deficiencies in their underwriting practices and to self-report any deficient loans identified by their quality control program. In August 2008, First Tennessee sold First Horizon to MetLife Bank N.A. (MetLife), a wholly-owned subsidiary of MetLife Inc., which thereafter originated FHA-insured mortgages under the MetLife name. In February 2015, MetLife agreed to pay $123.5 million to resolve its False Claims Act liability arising from its FHA originations after it acquired First Horizon from First Tennessee.
“First Tennessee admitted failings that resulted in poor quality FHA loans,” said Acting U.S. Attorney John A. Horn of the Northern District of Georgia. “While First Tennessee profited from these loans, taxpayers incurred substantial losses when the loans defaulted. The settlement, as well as the investigation that preceded it, illustrates that the Department of Justice will closely scrutinize entities that cause financial injury to the government, and, in turn, the American taxpayer.”
The settlement announced today resolves allegations that First Tennessee failed to comply with FHA origination, underwriting and quality control requirements. As part of the settlement, First Tennessee admitted to the following facts: From January 2006 through October 2008, it repeatedly certified for FHA insurance mortgage loans that did not meet HUD underwriting requirements. Beginning in late 2007, First Tennessee significantly increased its FHA originations. The quality of First Tennessee’s FHA underwriting significantly decreased during 2008 as its FHA lending increased. Beginning no later than early 2008, First Tennessee became aware that a substantial percentage of its FHA loans were not eligible for FHA mortgage insurance due to its own quality control findings. These findings were routinely shared with First Tennessee’s senior managers. Despite internally acknowledging that hundreds of its FHA mortgages had material deficiencies, and despite its obligation to self-report findings of material violations of FHA requirements, First Tennessee failed to report even a single deficient mortgage to FHA. First Tennessee’s conduct caused FHA to insure hundreds of loans that were not eligible for insurance and, as a result, FHA suffered substantial losses when it later paid insurance claims on those loans.
“Our investigation found that First Tennessee caused FHA to pay claims on loans that the bank never should have approved and insured in the first place,” said HUD Inspector General David A. Montoya. “This settlement reinforces my commitment to combat fraud in the origination of single family mortgages insured by the FHA and makes certain that only qualified, creditworthy borrowers who can repay their mortgages are approved under the FHA program.”
“We are pleased that First Tennessee has acknowledged facts that demonstrate its failure to comply with HUD’s requirements and has agreed to settle with the government,” said HUD General Counsel Helen Kanovsky. “We thank the Department of Justice and HUD’s Office of Inspector General for all of their efforts in helping us to make this settlement a reality. We hope this agreement sends a message to those lenders with whom we do business that HUD takes compliance very seriously and so should they.”
The investigation of the allegations in the government’s complaint was a coordinated effort between the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the Northern District of Georgia, HUD and HUD’s Office of Inspector General.
Tuesday, April 14, 2015
TWO CARDIOVASCULAR TESTING LABS SETTLE FALSE CLAIMS ACCUSATIONS AND WILL PAY $48.5 MILLION
FROM: U.S. JUSTICE DEPARTMENT
Thursday, April 9, 2015
Two Cardiovascular Disease Testing Laboratories to Pay $48.5 Million to Settle Claims of Paying Kickbacks and Conducting Unnecessary Testing
United States Sues Two Other Companies and Three Individuals for Similar Violations
Cardiovascular testing disease laboratories Health Diagnostics Laboratory Inc. (HDL), of Richmond, Virginia, and Singulex Inc., of Alameda, California, have agreed to resolve allegations that they violated the False Claims Act by paying remuneration to physicians in exchange for patient referrals and billing federal health care programs for medically unnecessary testing, the Department of Justice announced today. Under the settlements, which stem from three related whistleblower actions filed under the federal False Claims Act, HDL will pay $47 million and Singulex will pay $1.5 million. The government also intervened in the lawsuits as to similar allegations against another laboratory, Berkeley HeartLab Inc.; a marketing company, BlueWave Healthcare Consultants Inc., and its owners, Floyd Calhoun Dent and J. Bradley Johnson; and former CEO Latonya Mallory of HDL.
“Health care providers that attempt to profit by providing illegal inducements will be held accountable,” said Acting Assistant Attorney General Benjamin C. Mizer for the Justice Department’s Civil Division. “We will continue to advocate for the appropriate use of Medicare funds and the proper care of our senior citizens.”
As alleged in the lawsuits, HDL, Singulex and Berkeley induced physicians to refer patients to them for blood tests by paying them processing and handling fees of between $10 and $17 per referral and by routinely waiving patient co-pays and deductibles. In addition, HDL and Singulex allegedly conspired with BlueWave to offer these inducements on behalf of HDL and Singulex. As a result, physicians allegedly referred patients to HDL, Singulex and Berkeley for medically unnecessary tests, which were then billed to federal health care programs, including Medicare.
The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by federally funded programs. The Anti-Kickback Statute is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient.
“The District of South Carolina has more than doubled its resources allocated to the pursuit of fraud, including matters brought to our attention by whistleblowers,” said U.S. Attorney Bill Nettles of the District of South Carolina. “Whistleblower actions are a critical tool for holding health care providers accountable for fraudulent and abusive practices not only in South Carolina but nationwide.”
“When health care companies pursue profits by paying kickbacks to doctors, they undermine a patient’s ability to trust that medical decisions are being made for scientific reasons, not financial ones,” said Acting U.S. Attorney Vincent H. Cohen Jr. of the District of Columbia. “Those kickbacks also harm the taxpayer because they drive up the cost of federal health care programs with medically unnecessary tests. This significant settlement shows our determination to work with whistleblowers and our federal partners to defend the integrity of the health care system from illegal agreements that hurt patients and taxpayers.”
As part of the settlements, HDL and Singulex have agreed to enter into separate corporate integrity agreements with the Department of Health and Human Services’ Office of Inspector General (HHS-OIG). Those agreements provide for procedures and reviews to be put in place to avoid and promptly detect conduct similar to that which gave rise to these settlements.
“Today’s announcement that DOJ has settled in part and intervened in part in these whistleblower actions reflects the commitment by DOJ, our agency and our other law enforcement partners to ferret out alleged improper Medicare billings by health care companies that are looking to increase their profits at the expense of taxpayers,” said Special Agent in Charge Derrick L. Jackson of the HHS-OIG Atlanta Regional Office.
The lawsuits were filed by Dr. Michael Mayes, Scarlett Lutz, Kayla Webster and Chris Reidel under the qui tam, or whistleblower, provisions of the False Claims Act. Under the act, private citizens can bring suit on behalf of the government for false claims and share in any recovery. The whistleblowers’ share of the settlements has yet to be determined. The act also permits the United States to intervene in and take over a whistleblower suit, as it has done in part in the three actions. The United States advised the court that it would be filing its own complaint against the corporate and individual defendants against whom it has intervened within 120 days.
Two of the lawsuits separately allege that the former CEO Phillipe Goix of Singulex and Quest Diagnostics Inc., parent of Berkeley, are liable for the scheme; the government declined to intervene in the allegations against Goix and Quest.
The government’s actions illustrate its emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 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 Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $23.9 billion through False Claims Act cases, with more than $15.2 billion of that amount recovered in cases involving fraud against federal health care programs.
These matters were investigated by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Offices of the District of South Carolina, the District of Columbia and the Middle District of North Carolina, HHS-OIG, the FBI, the U.S. Office of Personnel Management’s Office of Inspector General, and the Department of Defense’s Office of Inspector General Defense Criminal Investigative Service.
The cases are captioned United States ex rel. Mayes v. Berkeley HeartLab Inc., et al., Case No. 9:11-CV-01593-RMG (D.S.C.); United States ex rel. Riedel v. Health Diagnostic Laboratory, Inc., et al., Case No. 1:11-CV-02308 (D.D.C.); and United States, et al. ex rel. Lutz, et al. v. Health Diagnostic Laboratory, Inc., et al., Case No. 9:14-CV-0230-RMG (D.S.C.). The claims settled by these agreements and asserted against these companies and individuals are allegations only, and there has been no determination of liability.
Thursday, April 9, 2015
Two Cardiovascular Disease Testing Laboratories to Pay $48.5 Million to Settle Claims of Paying Kickbacks and Conducting Unnecessary Testing
United States Sues Two Other Companies and Three Individuals for Similar Violations
Cardiovascular testing disease laboratories Health Diagnostics Laboratory Inc. (HDL), of Richmond, Virginia, and Singulex Inc., of Alameda, California, have agreed to resolve allegations that they violated the False Claims Act by paying remuneration to physicians in exchange for patient referrals and billing federal health care programs for medically unnecessary testing, the Department of Justice announced today. Under the settlements, which stem from three related whistleblower actions filed under the federal False Claims Act, HDL will pay $47 million and Singulex will pay $1.5 million. The government also intervened in the lawsuits as to similar allegations against another laboratory, Berkeley HeartLab Inc.; a marketing company, BlueWave Healthcare Consultants Inc., and its owners, Floyd Calhoun Dent and J. Bradley Johnson; and former CEO Latonya Mallory of HDL.
“Health care providers that attempt to profit by providing illegal inducements will be held accountable,” said Acting Assistant Attorney General Benjamin C. Mizer for the Justice Department’s Civil Division. “We will continue to advocate for the appropriate use of Medicare funds and the proper care of our senior citizens.”
As alleged in the lawsuits, HDL, Singulex and Berkeley induced physicians to refer patients to them for blood tests by paying them processing and handling fees of between $10 and $17 per referral and by routinely waiving patient co-pays and deductibles. In addition, HDL and Singulex allegedly conspired with BlueWave to offer these inducements on behalf of HDL and Singulex. As a result, physicians allegedly referred patients to HDL, Singulex and Berkeley for medically unnecessary tests, which were then billed to federal health care programs, including Medicare.
The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by federally funded programs. The Anti-Kickback Statute is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient.
“The District of South Carolina has more than doubled its resources allocated to the pursuit of fraud, including matters brought to our attention by whistleblowers,” said U.S. Attorney Bill Nettles of the District of South Carolina. “Whistleblower actions are a critical tool for holding health care providers accountable for fraudulent and abusive practices not only in South Carolina but nationwide.”
“When health care companies pursue profits by paying kickbacks to doctors, they undermine a patient’s ability to trust that medical decisions are being made for scientific reasons, not financial ones,” said Acting U.S. Attorney Vincent H. Cohen Jr. of the District of Columbia. “Those kickbacks also harm the taxpayer because they drive up the cost of federal health care programs with medically unnecessary tests. This significant settlement shows our determination to work with whistleblowers and our federal partners to defend the integrity of the health care system from illegal agreements that hurt patients and taxpayers.”
As part of the settlements, HDL and Singulex have agreed to enter into separate corporate integrity agreements with the Department of Health and Human Services’ Office of Inspector General (HHS-OIG). Those agreements provide for procedures and reviews to be put in place to avoid and promptly detect conduct similar to that which gave rise to these settlements.
“Today’s announcement that DOJ has settled in part and intervened in part in these whistleblower actions reflects the commitment by DOJ, our agency and our other law enforcement partners to ferret out alleged improper Medicare billings by health care companies that are looking to increase their profits at the expense of taxpayers,” said Special Agent in Charge Derrick L. Jackson of the HHS-OIG Atlanta Regional Office.
The lawsuits were filed by Dr. Michael Mayes, Scarlett Lutz, Kayla Webster and Chris Reidel under the qui tam, or whistleblower, provisions of the False Claims Act. Under the act, private citizens can bring suit on behalf of the government for false claims and share in any recovery. The whistleblowers’ share of the settlements has yet to be determined. The act also permits the United States to intervene in and take over a whistleblower suit, as it has done in part in the three actions. The United States advised the court that it would be filing its own complaint against the corporate and individual defendants against whom it has intervened within 120 days.
Two of the lawsuits separately allege that the former CEO Phillipe Goix of Singulex and Quest Diagnostics Inc., parent of Berkeley, are liable for the scheme; the government declined to intervene in the allegations against Goix and Quest.
The government’s actions illustrate its emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 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 Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $23.9 billion through False Claims Act cases, with more than $15.2 billion of that amount recovered in cases involving fraud against federal health care programs.
These matters were investigated by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Offices of the District of South Carolina, the District of Columbia and the Middle District of North Carolina, HHS-OIG, the FBI, the U.S. Office of Personnel Management’s Office of Inspector General, and the Department of Defense’s Office of Inspector General Defense Criminal Investigative Service.
The cases are captioned United States ex rel. Mayes v. Berkeley HeartLab Inc., et al., Case No. 9:11-CV-01593-RMG (D.S.C.); United States ex rel. Riedel v. Health Diagnostic Laboratory, Inc., et al., Case No. 1:11-CV-02308 (D.D.C.); and United States, et al. ex rel. Lutz, et al. v. Health Diagnostic Laboratory, Inc., et al., Case No. 9:14-CV-0230-RMG (D.S.C.). The claims settled by these agreements and asserted against these companies and individuals are allegations only, and there has been no determination of liability.
Friday, January 2, 2015
DOJ FILES LAWSUIT AGAINST PHARMA CONSULTING SERVICE FOR ALLEGEDLY TAKING KICKBACKS FROM PHARMA MANUFACTURERS
FROM: U.S. JUSTICE DEPARTMENT
Monday, December 22, 2014
United States Files Suit Against Omnicare Inc. for Accepting Kickbacks from Drug Manufacturer to Promote an Anti-Epileptic Drug in Nursing Homes
The United States has filed a civil False Claims Act complaint against Omnicare Inc. alleging that it solicited and received millions of dollars in kickbacks from pharmaceutical manufacturer Abbott Laboratories, the Justice Department announced today. Omnicare is the nation’s largest provider of pharmaceuticals and pharmacy consulting services to nursing homes. Federal regulations designed to protect nursing home residents from unnecessary drugs require nursing homes to retain consulting pharmacists such as those provided by Omnicare to ensure that residents’ drug prescriptions are appropriate.
In its complaint, the United States alleges that Omnicare solicited and received kickbacks from Abbott in exchange for purchasing and recommending the prescription drug Depakote for controlling behavioral disturbances exhibited by dementia patients residing in nursing homes serviced by Omnicare. According to the complaint, Omnicare’s pharmacists reviewed nursing home patients’ charts at least monthly and made recommendations to physicians on what drugs should be prescribed for those patients. The government alleges that Omnicare touted its influence over physicians in nursing homes in order to secure kickbacks from pharmaceutical companies such as Abbott.
“Elderly nursing home residents suffering from dementia are among our nation’s most vulnerable patient populations, and they depend on the independent judgment of healthcare professionals for their daily care,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division. “Kickbacks to consulting pharmacists compromise their independence and undermine their role in protecting nursing home residents from the use of unnecessary drugs.”
The United States alleges that Omnicare disguised the kickbacks it received from Abbott in a variety of ways. Abbott allegedly made payments to Omnicare described as “grants” and “educational funding,” even though their true purpose was to induce Omnicare to recommend Depakote. For example, according to the complaint, Omnicare solicited substantial contributions from Abbott and other pharmaceutical manufacturers to its “Re*View” program. Although Omnicare claimed that Re*View was a “health management” and “educational” program, the complaint alleges that it was simply a means by which Omnicare solicited kickbacks from pharmaceutical manufacturers in exchange for increasing the utilization of their drugs on elderly nursing home residents. In internal documents, Omnicare allegedly referred to Re*View as its “one extra script per patient” program. The complaint also alleges that Omnicare entered into agreements with Abbott by which Omnicare was entitled to increasing levels of rebates from Abbott based on the number of nursing home residents serviced and the amount of Depakote prescribed per resident. Finally, the complaint alleges that Abbott funded Omnicare management meetings on Amelia Island, Florida, offered tickets to sporting events to Omnicare management, and made other payments to local Omnicare pharmacies.
“Although the United States Attorney’s Office for the Western District of Virginia is small, we will not waver in our pursuit of the largest corporations, like Omnicare and Abbott, who illegally raid the coffers of Medicaid, Medicare, and other healthcare benefit programs,” said Acting U.S. Attorney Anthony P. Giorno for the Western District of Virginia.
“Kickback allegations place elderly nursing home residents at risk that treatment decisions are influenced by improper financial incentives,” said Special Agent in Charge Nicholas DiGiulio for the Department of Health and Human Services’ Office of Inspector General (HHS-OIG) region including Virginia. “We will continually guard government health programs and taxpayers from companies more intent on their bottom lines than on patient care.”
In May 2012, the United States, numerous individual states, and Abbott entered into a $1.5 billion global civil and criminal resolution that, among other things, resolved Abbott’s civil liability under the False Claims Act for paying kickbacks to nursing home pharmacies.
The United States filed its complaint against Omnicare in two consolidated whistleblower lawsuits filed under the False Claims Act in the Western District of Virginia. The whistleblower provisions of the False Claims Act authorize private parties to sue for fraud on behalf of the United States and share in any recovery. The United States is entitled to intervene and take over such lawsuits, as it has done here.
This case illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 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 Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $23.2 billion through False Claims Act cases, with more than $14.9 billion of that amount recovered in cases involving fraud against federal health care programs.
This investigation was jointly handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Western District of Virginia, HHS-OIG, the Office of the Attorney General for the Commonwealth of Virginia and the National Association of Medicaid Fraud Control Units.
The cases are captioned United States ex rel. Spetter v. Abbott Labs., et al., Case No. 10-cv-00006 (W.D. Va.) and United States ex rel. McCoyd v. Abbott Labs., et al., Case No. 07-cv-00081 (W.D. Va.). The claims asserted in the government’s complaint are allegations only and there has been no determination of liability.
Monday, December 22, 2014
United States Files Suit Against Omnicare Inc. for Accepting Kickbacks from Drug Manufacturer to Promote an Anti-Epileptic Drug in Nursing Homes
The United States has filed a civil False Claims Act complaint against Omnicare Inc. alleging that it solicited and received millions of dollars in kickbacks from pharmaceutical manufacturer Abbott Laboratories, the Justice Department announced today. Omnicare is the nation’s largest provider of pharmaceuticals and pharmacy consulting services to nursing homes. Federal regulations designed to protect nursing home residents from unnecessary drugs require nursing homes to retain consulting pharmacists such as those provided by Omnicare to ensure that residents’ drug prescriptions are appropriate.
In its complaint, the United States alleges that Omnicare solicited and received kickbacks from Abbott in exchange for purchasing and recommending the prescription drug Depakote for controlling behavioral disturbances exhibited by dementia patients residing in nursing homes serviced by Omnicare. According to the complaint, Omnicare’s pharmacists reviewed nursing home patients’ charts at least monthly and made recommendations to physicians on what drugs should be prescribed for those patients. The government alleges that Omnicare touted its influence over physicians in nursing homes in order to secure kickbacks from pharmaceutical companies such as Abbott.
“Elderly nursing home residents suffering from dementia are among our nation’s most vulnerable patient populations, and they depend on the independent judgment of healthcare professionals for their daily care,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division. “Kickbacks to consulting pharmacists compromise their independence and undermine their role in protecting nursing home residents from the use of unnecessary drugs.”
The United States alleges that Omnicare disguised the kickbacks it received from Abbott in a variety of ways. Abbott allegedly made payments to Omnicare described as “grants” and “educational funding,” even though their true purpose was to induce Omnicare to recommend Depakote. For example, according to the complaint, Omnicare solicited substantial contributions from Abbott and other pharmaceutical manufacturers to its “Re*View” program. Although Omnicare claimed that Re*View was a “health management” and “educational” program, the complaint alleges that it was simply a means by which Omnicare solicited kickbacks from pharmaceutical manufacturers in exchange for increasing the utilization of their drugs on elderly nursing home residents. In internal documents, Omnicare allegedly referred to Re*View as its “one extra script per patient” program. The complaint also alleges that Omnicare entered into agreements with Abbott by which Omnicare was entitled to increasing levels of rebates from Abbott based on the number of nursing home residents serviced and the amount of Depakote prescribed per resident. Finally, the complaint alleges that Abbott funded Omnicare management meetings on Amelia Island, Florida, offered tickets to sporting events to Omnicare management, and made other payments to local Omnicare pharmacies.
“Although the United States Attorney’s Office for the Western District of Virginia is small, we will not waver in our pursuit of the largest corporations, like Omnicare and Abbott, who illegally raid the coffers of Medicaid, Medicare, and other healthcare benefit programs,” said Acting U.S. Attorney Anthony P. Giorno for the Western District of Virginia.
“Kickback allegations place elderly nursing home residents at risk that treatment decisions are influenced by improper financial incentives,” said Special Agent in Charge Nicholas DiGiulio for the Department of Health and Human Services’ Office of Inspector General (HHS-OIG) region including Virginia. “We will continually guard government health programs and taxpayers from companies more intent on their bottom lines than on patient care.”
In May 2012, the United States, numerous individual states, and Abbott entered into a $1.5 billion global civil and criminal resolution that, among other things, resolved Abbott’s civil liability under the False Claims Act for paying kickbacks to nursing home pharmacies.
The United States filed its complaint against Omnicare in two consolidated whistleblower lawsuits filed under the False Claims Act in the Western District of Virginia. The whistleblower provisions of the False Claims Act authorize private parties to sue for fraud on behalf of the United States and share in any recovery. The United States is entitled to intervene and take over such lawsuits, as it has done here.
This case illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 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 Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $23.2 billion through False Claims Act cases, with more than $14.9 billion of that amount recovered in cases involving fraud against federal health care programs.
This investigation was jointly handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Western District of Virginia, HHS-OIG, the Office of the Attorney General for the Commonwealth of Virginia and the National Association of Medicaid Fraud Control Units.
The cases are captioned United States ex rel. Spetter v. Abbott Labs., et al., Case No. 10-cv-00006 (W.D. Va.) and United States ex rel. McCoyd v. Abbott Labs., et al., Case No. 07-cv-00081 (W.D. Va.). The claims asserted in the government’s complaint are allegations only and there has been no determination of liability.
Tuesday, December 2, 2014
SLEEP THERAPY CO. SETTLES ALLEGATIONS OF VIOLATING FALSE CLAIMS ACT
FROM: THE JUSTICE DEPARTMENT
Monday, December 1, 2014
Government Settles False Claims Act Allegations Against Oxygen and Sleep Therapy Company
North Atlantic Medical Services Inc. (NAMS), doing business as Regional Home Care Inc., has agreed to pay $852,378 to resolve allegations that it violated the False Claims Act by submitting claims to Medicare and Medicaid for respiratory therapy services provided by unlicensed personnel, the Department of Justice announced today. NAMS is a medical device company based in Massachusetts that provides equipment and services for the treatment of respiratory ailments, such as oxygen deficiency and sleep apnea.
“Respiratory care services should be performed by properly licensed personnel,” said Acting Assistant Attorney General Joyce R. Branda for the Civil Division. “We will not tolerate companies prioritizing their own profits and convenience at the expense of patient safeguards.”
Medicare and Medicaid require suppliers of respiratory therapy equipment and services to comply with state licensing standards. In Massachusetts, the Department of Public Health requires respiratory therapists to apply for and obtain a license. Applicants can do so by passing the National Board for Respiratory Care’s “Certification Examination for Entry-Level Respiratory Therapy Practitioners” or obtaining a reciprocal license from a different jurisdiction. This settlement resolves allegations that, from September 2010 to January 2013, NAMS used unlicensed employees to set up sleep apnea masks and oxygen therapy equipment for patients in Massachusetts. The government alleged that, even after the Massachusetts Department of Public Health informed the company that the practice was illegal, NAMS continued to use unlicensed personnel and bill Medicare and Medicaid for these services.
“This respiratory care company flouted important licensure requirements, failed to provide patients the standard of care that they deserve and fraudulently billed the federal government for improperly rendered services,” said U.S. Attorney Carmen M. Ortiz for the District of Massachusetts. “With the important assistance of whistleblowers, our health care fraud team seeks to ensure patient safety and protect the public fisc.”
“To safeguard patient health and ensure that taxpayer money is spent well, Medicare and Medicaid require providers of respiratory care services to follow state licensure rules,” said Special Agent in Charge Phillip M. Coyne for the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “Companies seeking to boost profits by using unlicensed personnel will be held accountable for their actions.”
Medicaid is jointly funded by the states and federal government. The Commonwealth of Massachusetts, which paid in part for the Medicaid claims at issue, will receive $229,210 of the settlement amount.
The government’s investigation was initiated by a qui tam, or whistleblower, lawsuit filed under the False Claims Act by former NAMS employees Konstantinos Gakis and Demetri Papageorgiou. The False Claims Act allows private citizens to file suit for false claims on behalf of the government and to share in the government’s recovery. Gakis and Papageorgiou will receive $153,428.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 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 Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $23.2 billion through False Claims Act cases, with more than $14.9 billion of that amount recovered in cases involving fraud against federal health care programs.
This settlement was the result of a coordinated effort by the Civil Division, the U.S. Attorney’s Office for the District of Massachusetts, FBI, HHS-OIG, and the Commonwealth of Massachusetts.
Monday, December 1, 2014
Government Settles False Claims Act Allegations Against Oxygen and Sleep Therapy Company
North Atlantic Medical Services Inc. (NAMS), doing business as Regional Home Care Inc., has agreed to pay $852,378 to resolve allegations that it violated the False Claims Act by submitting claims to Medicare and Medicaid for respiratory therapy services provided by unlicensed personnel, the Department of Justice announced today. NAMS is a medical device company based in Massachusetts that provides equipment and services for the treatment of respiratory ailments, such as oxygen deficiency and sleep apnea.
“Respiratory care services should be performed by properly licensed personnel,” said Acting Assistant Attorney General Joyce R. Branda for the Civil Division. “We will not tolerate companies prioritizing their own profits and convenience at the expense of patient safeguards.”
Medicare and Medicaid require suppliers of respiratory therapy equipment and services to comply with state licensing standards. In Massachusetts, the Department of Public Health requires respiratory therapists to apply for and obtain a license. Applicants can do so by passing the National Board for Respiratory Care’s “Certification Examination for Entry-Level Respiratory Therapy Practitioners” or obtaining a reciprocal license from a different jurisdiction. This settlement resolves allegations that, from September 2010 to January 2013, NAMS used unlicensed employees to set up sleep apnea masks and oxygen therapy equipment for patients in Massachusetts. The government alleged that, even after the Massachusetts Department of Public Health informed the company that the practice was illegal, NAMS continued to use unlicensed personnel and bill Medicare and Medicaid for these services.
“This respiratory care company flouted important licensure requirements, failed to provide patients the standard of care that they deserve and fraudulently billed the federal government for improperly rendered services,” said U.S. Attorney Carmen M. Ortiz for the District of Massachusetts. “With the important assistance of whistleblowers, our health care fraud team seeks to ensure patient safety and protect the public fisc.”
“To safeguard patient health and ensure that taxpayer money is spent well, Medicare and Medicaid require providers of respiratory care services to follow state licensure rules,” said Special Agent in Charge Phillip M. Coyne for the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “Companies seeking to boost profits by using unlicensed personnel will be held accountable for their actions.”
Medicaid is jointly funded by the states and federal government. The Commonwealth of Massachusetts, which paid in part for the Medicaid claims at issue, will receive $229,210 of the settlement amount.
The government’s investigation was initiated by a qui tam, or whistleblower, lawsuit filed under the False Claims Act by former NAMS employees Konstantinos Gakis and Demetri Papageorgiou. The False Claims Act allows private citizens to file suit for false claims on behalf of the government and to share in the government’s recovery. Gakis and Papageorgiou will receive $153,428.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 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 Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $23.2 billion through False Claims Act cases, with more than $14.9 billion of that amount recovered in cases involving fraud against federal health care programs.
This settlement was the result of a coordinated effort by the Civil Division, the U.S. Attorney’s Office for the District of Massachusetts, FBI, HHS-OIG, and the Commonwealth of Massachusetts.
Friday, October 31, 2014
BONE GROWTH STIMULATOR COMPANIES TO PAY $6 MILLION RELATED TO ALLEGED KICKBACKS
FROM: U.S. JUSTICE DEPARTMENT
Wednesday, October 29, 2014
Biomet Companies to Pay Over $6 Million to Resolve False Claims Act Allegations Concerning Bone Growth Stimulators
EBI LLC, doing business as Biomet Spine and Bone Healing Technologies and Biomet Inc. have agreed to pay $6.07 million to resolve allegations that EBI violated the False Claims Act by paying kickbacks to induce use of its bone growth stimulators and billing federal health care programs for refurbished stimulators, the Department of Justice announced today. EBI is a medical device company located in Parsippany, New Jersey, that sells bone growth stimulators, which are used to repair fractures that are slow to heal. It is a subsidiary of Biomet, which is based in Warsaw, Indiana.
“Medical device companies must not use improper financial incentives to influence the decision to use their products,” said Acting Deputy Assistant Attorney General August Flentje of the Justice Department’s Civil Division. “This settlement demonstrates the department’s commitment to protect patients, and the taxpayers who fund their care, by ensuring that medical decisions are based on the patients’ medical needs rather than the financial interests of others.”
The United States alleged that, from 2001 to 2008, EBI paid staff at doctors’ offices to influence doctors to order its bone growth stimulators. These payments were allegedly provided pursuant to personal service agreements with staff members. The United States concluded that these payments violated the Anti-Kickback Act and resulted in false billings to various federal health care programs, including Medicare. The settlement also resolves EBI’s disclosure that it received federal reimbursements for bone growth stimulators that had been refurbished.
“This settlement demonstrates our resolve in ensuring that patients receive, and the government pays for, health care that is based on sound medical judgment, and not compromised by kickbacks,” said U.S. Attorney Carmen M. Ortiz of the District of Massachusetts.
“Kickbacks taint medical decision-making, cause overutilization of services, and lead to increased taxpayer and patient costs,” said Special Agent in Charge Phillip Coyne of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG). “These improper inducements have no place in government health programs relied on by millions of Americans.”
The settlement resolves in part an allegation filed in a lawsuit by Yu Yue, a former product manager for EBI, in federal court in New Jersey. The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. Yu’s share has not yet been determined.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 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 Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $23 billion through False Claims Act cases, with more than $14.8 billion of that amount recovered in cases involving fraud against federal health care programs.
The settlement was the result of a coordinated effort by the Commercial Litigation Branch of the Civil Division; the U.S. Attorney’s Office for the District of Massachusetts; HHS-OIG; the U.S. Postal Service Office of Inspector General; the Defense Criminal Investigative Service; the U.S. Department of Veterans Affairs, Office of Inspector General and the U.S. Food and Drug Administration, Office of Criminal Investigations.
Monday, October 27, 2014
HEALTHCARE COMPANY TO PAY $350 MILLION TO RESOLVE ALLEGATIONS OF GIVING ILLEGAL KICKBACKS
FROM: U.S. JUSTICE DEPARTMENT
Wednesday, October 22, 2014
DaVita to Pay $350 Million to Resolve Allegations of Illegal Kickbacks
The settlement today resolves allegations that, between March 1, 2005 and February 1, 2014, DaVita identified physicians or physician groups that had significant patient populations suffering renal disease and offered them lucrative opportunities to partner with DaVita by acquiring and/or selling an interest in dialysis clinics to which their patients would be referred for dialysis treatment. DaVita further ensured referrals of these patients to the clinics through a series of secondary agreements with the physicians, including entering into agreements in which the physician agreed not to compete with the DaVita clinic and non-disparagement agreements that would have prevented the physicians from referring their patients to other dialysis providers.
“Health care providers should generate business by offering their patients superior quality services or more convenient options, not by entering into contractual agreements designed to induce physicians to provide referrals,” said Deputy Assistant Attorney General for the Justice Department’s Civil Division Jonathan F. Olin. “The Justice Department is committed to protecting the integrity of our healthcare system and ensuring that financial arrangements in the healthcare marketplace comply with the law.”
The government alleged that DaVita used a three part joint venture business model to induce patient referrals. First, using information gathered from numerous sources, DaVita identified physicians or physician groups that had significant patient populations suffering renal disease within a specific geographic area. DaVita would then gather specific information about the physicians or physician group to determine if they would be a “winning practice.” In one transaction, a physician’s group was considered a “winning practice” because the physicians were “young and in debt.” Based on this careful vetting process, DaVita knew and expected that many, if not most, of the physicians’ patients would be referred to the joint venture dialysis clinics.
Next, DaVita would offer the targeted physician or physician group a lucrative opportunity to enter into a joint venture involving DaVita’s acquisition of an interest in dialysis clinics owned by the physicians, and/or DaVita’s sale of an interest in its dialysis clinics to the physicians. To make the transaction financially attractive to potential physician partners, DaVita would manipulate the financial models used to value the transaction. For example, to decrease the apparent value of clinics it was selling, DaVita would employ an assumption it referred to as the “HIPPER compression,” which was based on a speculative and arbitrary projection that future payments for dialysis treatments by commercial insurance companies would be cut by as much as half in future years. These manipulations resulted in physicians paying less for their interest in the joint ventures and realizing returns on investment which were extraordinarily high, with pre-tax annual returns exceeding 100 percent in some instances.
Last, DaVita ensured future patient referrals through a series of secondary agreements with their physician partners. These included paying the physicians to serve as medical directors of the joint venture clinics, and entering into agreements in which the physicians agreed not to compete with the clinic. The non-compete agreements were structured so that they bound all physicians in a practice group, even if some of the physicians were not part of the joint venture arrangements. These agreements also included provisions prohibiting the physician partners from inducing or advising a patient to seek treatment at a competing dialysis clinic. These agreements were of such importance to DaVita that it would not conclude a joint venture transaction without them.
The Government’s complaint identifies a joint venture with a physicians’ group in central Florida as one of several examples illustrating DaVita’s scheme to improperly induce patient referrals. The group had previously been in a joint venture arrangement involving dialysis clinics with Gambro, Inc., a dialysis company acquired by DaVita in 2005. Prior to the acquisition, Gambro had entered into a settlement with the United States to resolve alleged kickback allegations that, among other things, required Gambro to unwind its joint venture agreements. As a consequence, Gambro purchased the group’s interest in the joint venture clinics and agreed to a “carve-out” of the associated non-competition agreement which allowed the group to open its own dialysis clinic nearby, which it did. After acquiring Gambro, DaVita bought a majority position in the group’s newly established dialysis clinic, and sold a minority position in three DaVita-owned clinics. Despite the fact that each of the clinics involved were roughly comparable in terms of size and profits, DaVita agreed to pay $5,975,000 to acquire a 60 percent interest in the group’s clinic, while selling a 40 percent interest in the three clinics it owned for a total of $3,075,000. As part of this joint venture, the group agreed to enter into new non-compete agreements.
“This case involved a sophisticated scheme to compensate doctors illegally for referring patients to DaVita’s dialysis centers. Federal law protects patients by making buying and selling patient referrals illegal, so as to ensure that the interest of the patient is the exclusive factor in the referral decision,” said U.S. Attorney John Walsh. “When a company pays doctors and/or their practice groups for patient referrals, the company’s focus is not on the patient, but on the profit to be extracted from providing services to the patient.”
In conjunction with today’s announcement, the U.S. Attorney’s Office noted that after extensive review, it is closing its criminal investigation of two specific joint ventures.
As part of the settlement announced today, DaVita has also agreed to a Civil Forfeiture in the amount of $39 million based upon conduct related to two specific joint venture transactions entered into in Denver, Colorado. Additionally, DaVita has entered into a Corporate Integrity Agreement with the Office of Counsel to the Inspector General of the Department of Health and Human Services which requires it to unwind some of its business arrangements and restructure others, and includes the appointment of an Independent Monitor to prospectively review DaVita’s arrangements with nephrologists and other health care providers for compliance with the Anti-Kickback Statute.
“Companies seeking to boost profits by paying physician kickbacks for patient referrals – as the government contended in this case – undermine impartial medical judgment at the expense of patients and taxpayers,” said Daniel R. Levinson, Inspector General for the U.S. Department of Health and Human Services. “Expect significant settlements and our continued investigation of such wasteful business arrangements.”
The settlement resolves allegations originally brought in a lawsuit filed under the qui tam or whistleblower provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery. The suit was filed by David Barbetta, who was previously employed by DaVita as a Senior Financial Analyst in DaVita’s Mergers and Acquisitions Department. Mr. Barbetta’s share of the recovery has yet to be determined.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 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 Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $22.4 billion through False Claims Act cases, with more than $14.2 billion of that amount recovered in cases involving fraud against federal health care programs.
The case was handled by the United States Attorney’s Office for the District of Colorado, the Civil Division of the United States Department of Justice, and the U.S. Department of Health and Human Services, Office of Inspector General.
The lawsuit is captioned United States ex rel. David Barbetta v. DaVita, Inc. et al., No. 09-cv-02175-WJM-KMT (D. Colo.). The claims settled by this agreement are allegations only; there has been no determination of liability.
Friday, October 24, 2014
2 CARDIOLOGISTS TO PAY $380,000 STEMMING FROM FALSE CLAIMS ACT VIOLATIONS ALLEGATIONS
FROM: U.S. JUSTICE DEPARTMENT
Tuesday, October 21, 2014
Kentucky Cardiologists Agree to Pay $380,000 to Settle False Claims Act Allegations Based on Illegal Referrals
The Department of Justice announced today that two cardiologists based in London, Kentucky, have agreed to pay $380,000 to resolve allegations that they violated the False Claims Act by entering into sham management agreements with Saint Joseph Hospital, also based in London, Kentucky, in exchange for the referral of cardiology procedures and other healthcare services to Saint Joseph.
“Physicians who place their financial interests above the well-being of their patients will be held accountable,” said Acting Assistant Attorney General Joyce R. Branda for the Civil Division. “The Department of Justice is committed to preventing illegal financial relationships that undermine the integrity of our public healthcare programs.”
Satyabrata Chatterjee and Ashwini Anand jointly owned Cumberland Clinic, a physician group that provided cardiology services. The government alleged that St. Joseph Hospital entered into sham agreements with Chatterjee and Anand, under which the physicians were paid to provide management services but did not in fact do so. The government further alleged that, in exchange for the sham agreements, Chatterjee and Anand agreed to enter into an exclusive agreement with St. Joseph to refer Cumberland Clinic patients to the hospital for cardiology and other services in violation of the Stark Law and the Anti-Kickback Statute. The Stark Law forbids a hospital from billing Medicare for certain services referred by physicians who have a financial relationship with the entity. The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by federal health care programs, including Medicare.
“Financial relationships between healthcare providers that put profits over patients are a threat to the programs upon which millions of Americans depend,” said U.S. Attorney Kerry Harvey for the Eastern District of Kentucky. “We will continue to use all the tools available to us to safeguard our federally funded healthcare programs from those who seek to profit from them through illegal means.”
In addition to payment of the settlement amount, which was based on Chatterjee and Anand’s financial ability to pay, Chatterjee and Anand have agreed to enter into integrity agreements with the Department of Health and Human Services-Office of Inspector General (HHS-OIG), which obligate them to undertake substantial internal compliance reforms and to commit to a third-party review of their claims to federal health care programs for the next three years.
“Physicians who accept kickbacks in exchange for referrals undermine the integrity of the medical profession," said Special Agent in Charge Derrick L. Jackson of the HHS-OIG Atlanta region. “OIG will continue to protect both patients and taxpayers by holding physicians and hospitals accountable for improper claims."
The government previously entered into a $16.5 million settlement with Saint Joseph Hospital for the allegedly sham management contracts the hospital executed with Chatterjee and Anand, as well as for allegedly billing for unnecessary and excessive cardiology procedures by other members of Chatterjee and Anand’s cardiology practice.
The settlement announced today stems from a complaint filed by three Lexington, Kentucky, cardiologists pursuant to the whistleblower provisions of the False Claims Act, which permit private persons to bring a lawsuit on behalf of the United States. The act permits the United States to intervene in the lawsuit and take over the allegations, as the government did in this case. The three whistleblowers, Drs. Michael Jones, Paula Hollingsworth and Michael Rukavina, will collectively receive $68,400.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 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 Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $22.5 billion through False Claims Act cases, with more than $14.3 billion of that amount recovered in cases involving fraud against federal health care programs.
The investigation was conducted by the FBI, HHS-OIG, the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the Eastern District of Kentucky. The claims settled by this agreement are allegations only and there has been no determination of liability.
Tuesday, October 21, 2014
OPERATORS OF DIAGNOSTIC CENTERS TO PAY $2.6 MILLION SETTLING ALLEGATIONS OF FALSE CLAIMS ACT VIOLATIONS
FROM: U.S. JUSTICE DEPARTMENT
Friday, October 17, 2014
Operators of Houston Area Diagnostic Centers Agree to Pay $2.6 Million to Settle Alleged False Claims Act Violations
One group of centers, which operates under the name One Step Diagnostic and is owned and controlled by Fuad Rehman Cochinwala, has agreed to pay $1.2 million. The payment is being made to settle allegations that it violated the Stark Statute and the False Claims Act by entering into sham consulting and medical director agreements with physicians who referred patients to One Step Diagnostic Centers.
The other group of centers, which is owned and controlled by Rahul Dhawan, has agreed to pay $1,457,686. This group consists of Complete Imaging Solutions LLC doing business as Houston Diagnostics, Deerbrook Diagnostics & Imaging Center LLC, Elite Diagnostic Inc., Galleria MRI & Diagnostic LLC, Spring Imaging Center Inc. and West Houston MRI & Diagnostics LLC. The United States alleged that these centers engaged in improper financial relationships with referring physicians and improperly billed Medicare using the provider number of a physician who had not authorized them to do so and had not been involved in the provision of the services being billed.
“The Department of Justice has longstanding concerns about improper financial relationships between health care providers and their referral sources, because such relationships can alter a physician's judgment about the patient's true health care needs and drive up health care costs for everyone,” said Acting Assistant Attorney General Branda. “In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable.”
“These settlements totaling more than $2.6 million represent the continuing commitment of our office in combatting health care fraud,” said U.S. Attorney Magidson. “The U.S. takes these accusations seriously. Working within the whistleblower laws, we will continue to bring these cases to public view where tax payer money is being used improperly.”
The settlements announced today arose from a lawsuit filed by three whistleblowers under the qui tam provisions of the False Claims Act. Under that act, private citizens can bring suit on behalf of the government for false claims and share in any recovery.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 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 Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $22.5 billion through False Claims Act cases, with more than $14.3 billion of that amount recovered in cases involving fraud against federal health care programs.
The case, United States ex rel. Holderith, et al. v. One Step Diagnostic, Inc., et al., Case No. 12-CV-2988 (S.D. Tex.), was handled by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Southern District of Texas and Department of Health and Human Services - Office of Inspector General. The claims settled by this agreement are allegations only, and there has been no determination of liability.
Saturday, September 27, 2014
PHARMA COMPANY TO PAY OVER $56 MILLION TO RESOLVE ALLEGATIONS OF FALSE CLAIM ACT VIOLATIONS
FROM: U.S. JUSTICE DEPARTMENT
Wednesday, September 24, 2014
Shire Pharmaceuticals LLC to Pay $56.5 Million to Resolve False Claims Act Allegations Relating to Drug Marketing and Promotion Practices
Pharmaceutical company Shire Pharmaceuticals LLC will pay $56.5 million to resolve civil allegations that it violated the False Claims Act as a result of its marketing and promotion of several drugs, the Justice Department announced today. Shire, located in Wayne, Pennsylvania, manufactures and sells pharmaceuticals, including Adderall XR, Vyvanse and Daytrana, which are approved for the treatment of attention deficit hyperactivity disorder (ADHD), and Pentasa and Lialda, which are approved for the treatment of mild to moderate active ulcerative colitis.
“Patients and health care providers must receive accurate information about available prescription drugs so that they can make safe and informed treatment decisions,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division. “The Department of Justice will be vigilant to hold accountable pharmaceutical companies that provide misleading information regarding a drug’s safety or efficacy.”
The settlement resolves allegations that, between January 2004 and December 2007, Shire promoted Adderall XR for certain uses despite a lack of clinical data to support such claims and overstated the efficacy of Adderall XR, particularly relative to other ADHD drugs. Among the allegedly unsupported claims was that Adderall XR was clinically superior to other ADHD drugs because it would “normalize” its recipients, rendering them indistinguishable from their non-ADHD peers. Shire allegedly stated that its competitors’ products could not achieve similar results, which the government contended was not shown in the clinical data that Shire collected. Shire also allegedly marketed Adderall XR based on unsupported claims that Adderall XR would prevent poor academic performance, loss of employment, criminal behavior, traffic accidents and sexually transmitted disease. In addition, Shire allegedly promoted Adderall XR for the treatment of conduct disorder without approval from the Food and Drug Administration (FDA).
The settlement further resolves allegations that, between February 2007 and September 2010, Shire sales representatives and other agents allegedly made false and misleading statements about the efficacy and “abuseability” of Vyvanse to state Medicaid formulary committees and to individual physicians. For example, one Shire medical science liaison allegedly told a state formulary board that Vyvanse “provides less abuse liability” than “every other long-acting release mechanism” on the market. However, the government contended that no study Shire conducted had concluded that Vyvanse was not abuseable, and, as an amphetamine product, the Vyvanse label included an FDA-mandated black box warning for its potential for misuse and abuse. Shire also made allegedly unsupported claims that treatment with Vyvanse would prevent car accidents, divorce, arrests and unemployment.
Additionally, the settlement resolves allegations that from April 2006 to September 2010, Shire representatives improperly marketed Daytrana, administered through a patch, as less abuseable than traditional, pill-based medications, and, for part of this period, improperly made phone calls and drafted letters to state Medicaid authorities to assist physicians with the prior authorization process for prescriptions to induce these physicians to prescribe Daytrana and Vyvanse.
Finally, the settlement resolves allegations that between January 2006 and June 2010, Shire sales representatives promoted Lialda and Pentasa for off-label uses not approved by the FDA and not covered by federal healthcare programs. Specifically, the government alleged that Shire promoted Lialda off-label for the prevention of colorectal cancer.
"Marketing efforts that influence a doctor’s independent judgment can undermine the doctor-patient relationship and short-change the patient,” said U.S. Attorney Zane David Memeger for the Eastern District of Pennsylvania. “Where children’s medication is concerned, it can interfere with a parent’s right to clear information regarding the risks to the safety and health of their child. Shire cooperated throughout this investigation and, in advance of this settlement, began to correct its marketing activities.”
"This settlement represents another important step in our fight against fraud in federally-funded healthcare programs such as Medicare and Medicaid,” said U.S. Attorney Zachary T. Fardon for the Northern District of Illinois. “The Shire settlement returns funds not only to the U.S. government but also to the individual states whose health care programs rely in part on the efficacy of jointly-funded programs like Medicaid. We will continue doing everything in our power to combat fraud and ensure the integrity of our healthcare programs.”
As a result of today’s $56.5 million settlement, the federal government will receive $35,713,965, and state Medicaid programs will receive $20,786,034. The Medicaid program is funded jointly by the federal and state governments. In addition, Shire has separately reached agreement with the U.S. Department of Health and Human Services-Office of the Inspector General (HHS-OIG) on a corporate integrity agreement, which will address the company’s future marketing efforts.
“Our agency will continue to hold drug companies responsible for seeking to boost profits using false and misleading claims about products, such as the powerful medications prescribed to children and other drugs at issue in this settlement,” said Chief Counsel to the HHS Inspector General Gregory E. Demske. “We entered into a corporate integrity agreement with Shire that requires comprehensive compliance safeguards, oversight of Shire promotional activities, and compliance certifications from Shire’s board of directors and management.”
The allegations resolved by the settlement arose from a lawsuit filed by Dr. Gerardo Torres, a former Shire executive, and a separate lawsuit filed by Anita Hsieh, Kara Harris and Ian Clark, former Shire sales representatives. The lawsuits were filed under the False Claims Act’s whistleblower provisions, which permit private parties to sue for false claims on behalf of the government and to share in any recovery. Torres will receive $5.9 million.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of HHS. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $22.4 billion through False Claims Act cases, with more than $14.2 billion of that amount recovered in cases involving fraud against federal health care programs.
This case was a cooperative effort among the U.S. Attorneys’ Offices for the Eastern District of Pennsylvania and the Northern District of Illinois, the Justice Department’s Civil Division, Office of the Inspector General for the Office of Personnel Management, HHS-OIG and the FDA. The HHS Office of the General Counsel-CMS Division and the National Association of Medicaid Fraud Control Units also provided assistance.
Monday, July 28, 2014
BNP PARIBAS TO PAY $80 MILLION JUDGEMENT FOR FALSE CLAIMS TO USDA
FROM: U.S. JUSTICE DEPARTMENT
Thursday, July 24, 2014
$80 Million Judgment Entered Against BNP Paribas for False Claims to the U.S. Department of Agriculture
The Department of Justice announced today that an $80 million False Claims Act judgment was entered against BNP Paribas for submitting false claims for payment guarantees issued by the U.S. Department of Agriculture (USDA). BNP Paribas is a global financial institution headquartered in Paris.
“We will not tolerate the misuse of taxpayer funded programs designed to help American businesses,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “Companies that abuse these programs will be held accountable.”
The United States filed a lawsuit against BNP Paribas in connection with its receipt of payment guarantees under USDA’s Supplier Credit Guarantee (SCG) Program. The program provided payment guarantees to U.S.-based exporters for their sales of grain and other agricultural commodities to importers in foreign countries. The program encouraged American exporters to sell American agricultural commodities to foreign importers and covered part of the losses if the foreign importers failed to pay. The SCG Program regulations provided that U.S. exporters were ineligible to participate in the SCG Program if the exporter and foreign importer were under common ownership or control.
The judgment entered by the court resolves the government’s allegations that, from 1998 to 2005, BNP Paribas participated in a sustained scheme to defraud the SCG Program. In furtherance of the scheme, American exporters and Mexican importers who were under common control improperly obtained SCG Program export credit guarantees for transactions between the affiliated exporters and importers. In some cases, the underlying transactions were shams and did not involve any real shipment of grain. BNP Paribas accepted assignment of the credit guarantees from the American exporters, even though it knew that the affiliated exporters and importers were ineligible for SCG Program financing, and a BNP Paribas vice-president, Jerry Cruz, received bribes from the exporters. Beginning in April 2005, when the Mexican importers began defaulting on their payment obligations, BNP Paribas submitted claims to the USDA for the resulting losses.
On Jan. 20, 2012, Cruz pleaded guilty to conspiracy to commit bank fraud, mail fraud and wire fraud, and conspiracy to commit money laundering.
“I would like to thank the Department of Justice and the USDA General Counsel’s office for their collaboration in recovering $80 million under this judgment,” said Administrator of USDA’s Foreign Agricultural Service Phil Karsting. “This illustrates the importance USDA and this administration places on protecting the integrity of our programs.”
The resolution of this matter was the result of a coordinated effort among the Commercial Litigation Branch of the Justice Department’s Civil Division, the USDA, the USDA Office of Inspector General, the U.S. Postal Inspection Service and the Internal Revenue Service Criminal Investigation.
Wednesday, July 23, 2014
HOSPITAL SYSTEM, PHYSICIAN GROUP SETTLE FALSE CLAIMS LAWSUIT FOR $24.5 MILLION
FROM: U.S. JUSTICE DEPARTMENT
Monday, July 21, 2014
Alabama Hospital System and Physician Group Agree to Pay $24.5 Million to Settle Lawsuit Alleging False Claims for Illegal Medicare Referrals
Mobile, Alabama-based Infirmary Health System Inc. (IHS), two IHS-affiliated clinics and Diagnostic Physicians Group P.C. (DPG) have agreed to pay the United States $24.5 million to resolve a lawsuit alleging that they violated the False Claims Act by paying or receiving financial inducements in connection with claims to the Medicare program, the Justice Department announced today.
“Financial arrangements that compensate physicians for referrals encourage physicians to make decisions based on financial gain rather than patients’ needs,” said Assistant Attorney General for the Civil Division Stuart F. Delery. “The Department of Justice is committed to preventing illegal financial relationships that undermine the integrity of our public health programs.”
The government’s suit alleged that two IHS affiliated clinics -- IMC-Diagnostic and Medical Clinic, in Mobile, and IMC-Northside Clinic, in Saraland, Alabama -- had agreements with DPG to pay the group a percentage of Medicare payments for tests and procedures referred by DPG physicians, in violation of the Physician Self-Referral Law (commonly known as the Stark Law) and the Anti-Kickback Statute. Also named in the lawsuit was Infirmary Medical Clinics P.C. (IMC), an affiliate of IHS that directly owns and operates approximately 30 clinics in the Mobile area, including the two clinics involved in this lawsuit.
The Anti-Kickback Statute and the Stark Law are intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives. The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by federal health care programs, including Medicare. The Stark Law forbids a hospital or clinic from billing Medicare for certain services referred by physicians who have a financial relationship with the entity.
According to the government’s complaint, in 1988, IMC purchased IMC-Diagnostic and Medical Clinic from DPG and agreed to pay DPG a share of the revenues the clinics collected, including Medicare revenues from diagnostic imaging and laboratory tests. After IMC acquired the IMC-Northside Clinic in 2008, the physicians practicing there joined DPG and entered into an agreement with the same key terms as the earlier agreement with IMC-Diagnostic and Medical Clinic. The government contended that these payments were illegal kickbacks and constituted a prohibited financial relationship under the Stark Law, and that in June 2010, an attorney for DPG warned employees of both IMC and DPG that the compensation being paid to the physicians likely violated the law. Nevertheless, the agreements allegedly were neither modified nor terminated for another 18 months.
The lawsuit was originally filed by Dr. Christian Heesch, a physician formerly employed by DPG, under the whistleblower provisions of the False Claims Act. Those provisions authorize private parties to sue on behalf of the United States and to receive a portion of any recovery. The act permits the United States to intervene and take over the lawsuit, as it did in this case with respect to some of Dr. Heesch’s allegations. Dr. Heesch will receive $4.41 million as his share of the settlement.
“Today’s settlement represents a single but significant step towards achieving integrity in the administration of public health programs in this region,” said U.S. Attorney Kenyen Brown for the Southern District of Alabama. “Physicians, physician groups and other medical entities operating illegally within public health programs will be held accountable. I also commend whistle blowers like Dr. Christian Heesch, who helped bring this particular case to light.”
As part of the settlement announced today, the settling defendants have also agreed to enter into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), which obligates the defendants to undertake substantial internal compliance reforms and to submit its federal health care program claims to independent review for the next five years.
“Patients must know that medical advice is based on best practices, not on their provider’s bottom line,” said HHS-OIG Special Agent in Charge Derrick L. Jackson. “We are pleased these allegations are resolved and will continue to work with the U.S. Department of Justice to investigate and pursue illegal, wasteful business arrangements.”
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 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 Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $20.2 billion through False Claims Act cases, with more than $14 billion of that amount recovered in cases involving fraud against federal health care programs.
The investigation and litigation were conducted by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Southern District of Alabama, HHS-OIG and the FBI. The claims settled by this agreement are allegations only, and there has been no determination of liability.
The case is captioned U.S. ex rel. Heesch v. Diagnostic Physicians Group, P.C. et al., Civil Action No. 11-0364-KD-B (S.D. Ala.).
Tuesday, July 1, 2014
BANK TO PAY $200 MILLION TO RESOLVE ALLEGATIONS OF MORTGAGE LENDING VIOLATIONS
FROM: U.S. JUSTICE DEPARTMENT
Monday, June 30, 2014
U.S. Bank to Pay $200 Million to Resolve Alleged FHA Mortgage Lending Violations
U.S. Bank has agreed to pay the United States $200 million to resolve allegations that it violated the False Claims Act by knowingly originating and underwriting mortgage loans insured by the Federal Housing Administration (FHA) that did not meet applicable requirements, the Justice Department announced today.
“By misusing government programs designed to maintain and expand homeownership, U.S. Bank not only wasted taxpayer funds, but inflicted harm on homeowners and the housing market that lasts to this day,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “As this settlement shows, we will continue to hold accountable financial institutions that violate the law by pursuing their own financial interests at the expense of hardworking Americans.”
“U.S. Bank ignored certain lending requirements causing substantial losses to taxpayers,” said United States Attorney for the Northern District of Ohio Steven M. Dettelbach. “This settlement demonstrates that the Department of Justice will not permit lenders to play fast and loose with the rules and stick the American people with their significant tab.”
“U.S. Bank’s lax mortgage underwriting practices contributed to home foreclosures across the country,” said United States Attorney for the Eastern District of Michigan Barbara L. McQuade. “This settlement recovers funds for taxpayers and demonstrates that lenders will be held accountable for engaging in irresponsible lending practices.”
During the time period covered by the settlement, U.S. Bank participated as a direct endorsement lender (DEL) in the FHA insurance program. A DEL has the authority to originate, underwrite, and certify mortgages for FHA insurance. If a loan certified for FHA insurance later defaults, the holder of the loan may submit an insurance claim to the U.S. Department of Housing and Urban Development (HUD), FHA’s parent agency, for the losses resulting from the defaulted loan. Because FHA does not review a loan before it is endorsed for FHA insurance, FHA requires a DEL to follow program rules designed to ensure that the DEL is properly underwriting and submitting mortgages for FHA insurance.
As part of the settlement, U.S. Bank admitted that, from 2006 through 2011, it repeatedly certified for FHA insurance mortgage loans that did not meet HUD underwriting requirements. U.S. Bank also admitted that its quality control program did not meet FHA requirements, and as a result, it failed to identify deficiencies in many of the loans it had certified for FHA insurance, failed to self-report many deficient loans to HUD, and failed to take the corrective action required under the program. U.S. Bank further acknowledged that its conduct caused FHA to insure thousands of loans that were not eligible for insurance and that the FHA suffered substantial losses when it later paid insurance claims on those loans.
“This substantial recovery on behalf of the Federal Housing Administration should serve as a vivid reminder of the potential consequences of not following HUD program rules, and the diligence with which we will pursue those that violate them, particularly where lenders such as U.S. Bank take actions to compromise the insurance fund,” said David A. Montoya, Inspector General of the Department of Housing and Urban Development.
“We are gratified that U.S. Bank has agreed to put this matter behind it, and we want to thank the Department of Justice and HUD’s Office of Inspector General for all of their efforts in helping us make this settlement a reality,” said Damon Smith, Acting General Counsel for the U.S. Department of Housing and Urban Development. “This settlement underscores our consistent message that following Federal Housing Administration rules for underwriting FHA-insured loans is a requirement, not an option.”
The agreement resolves potential violations of federal law based on U.S. Bank’s deficient origination of FHA insured mortgages. The agreement does not prevent state and federal authorities from pursuing enforcement actions for other origination conduct by U.S. Bank, or for any servicing or foreclosure conduct, including civil enforcement actions against U.S. Bank for violations of the CFPB’s new mortgage servicing rules that took effect on Jan. 10, 2014. U.S. Bank is a banking services company headquartered in Cincinnati, Ohio, and a wholly owned subsidiary of U.S. Bancorp, a bank holding company headquartered in Minneapolis, Minnesota.
The settlement was the result of a joint investigation conducted by HUD, its Office of Inspector General, the Civil Division of the Department of Justice, and the United States Attorney’s Offices for the Northern District of Ohio and the Eastern District of Michigan.
The settlement is part of enforcement efforts by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes.
Thursday, May 8, 2014
U.S. FILES COMPLAINT UNDER FALSE CLAIMS AGAINST COLLEGE FOR ILLEGAL RECRUITING
FROM: U.S. JUSTICE DEPARTMENT
Thursday, May 8, 2014
United States Files Complaint Against Stevens-Henager College, Inc. Alleging False Claims Act Violations for Illegal Recruiting
The United States has filed a complaint under the False Claims Act against Stevens-Henager College, Inc. and its owner, The Center for Excellence in Higher Education, for illegally compensating recruiters, the Department of Justice announced today. Stevens-Henager operates a chain of for-profit colleges in Idaho and Utah.
“Congress has made clear that colleges should not pay improper incentives to admissions recruiters,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “The Department of Justice and the Department of Education are working together to combat unlawful recruitment practices that can harm students and result in the waste of taxpayer funds.”
In its complaint, the government alleged that the college falsely certified compliance with provisions of federal law that prohibit a university from paying incentive-based compensation to its admissions recruiters based on the number of students they recruit. Congress enacted the prohibition on such incentive compensation to curtail the enrollment of unqualified students, high student loan default rates, and the waste of student loans and grant funds.
The claims alleged by the United States were initiated by a whistleblower lawsuit filed by two former Stevens-Henager employees under the False Claims Act, which allows private citizens to file suit over false claims on behalf of the government. The act provides for the recovery of triple damages and penalties, and allows the government to intervene and take over the allegations, as it has done in this case. The whistleblower is entitled to a share of any recovery obtained in the lawsuit.
“Fighting fraud and protecting federal tax dollars from abuse is a priority for this office,” said U.S. Attorney Wendy Olson for the District of Idaho. “The False Claims Act is an important tool for doing just that. Whistleblowers are necessary to our ongoing efforts to combat fraud, waste and abuse.”
This matter was investigated by the Commercial Litigation Branch of the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Idaho, and the Department of Education, Office of Inspector General. The case is captioned United States ex rel. Brooks v. Stevens-Henager College, Inc., et al., Case No. 1:13-CV-00009-BLW (D. Id.). The claims asserted are allegations only, and there has been no determination of liability.
Wednesday, March 12, 2014
HOSPITAL SYSTEM TO PAY $85 MILLION TO SETTLE ALLEGED IMPROPER PHYSICIAN REFERRAL CASE
FROM: U.S. JUSTICE DEPARTMENT
Tuesday, March 11, 2014
Florida Hospital System Agrees to Pay the Government $85 Million to Settle Allegations of Improper Financial Relationships with Referring Physicians
Halifax Hospital Medical Center and Halifax Staffing Inc. (Halifax), a hospital system based in the Daytona Beach, Fla., area, have agreed to pay $85 million to resolve allegations that they violated the False Claims Act by submitting claims to the Medicare program that violated the Physician Self-Referral Law, commonly known as the Stark Law, the Justice Department announced today.
The Stark Law forbids a hospital from billing Medicare for certain services referred by physicians who have a financial relationship with the hospital. In this case, the government alleged that Halifax knowingly violated the Stark Law by executing contracts with six medical oncologists that provided an incentive bonus that improperly included the value of prescription drugs and tests that the oncologists ordered and Halifax billed to Medicare. The government also alleged that Halifax knowingly violated the Stark Law by paying three neurosurgeons more than the fair market value of their work.
“Financial arrangements that compensate physicians for referrals encourage physicians to make decisions based on financial gain rather than patient needs,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “The Department of Justice is committed to preventing illegal financial relationships that undermine the integrity of our public health programs.”
In a Nov. 13, 2013, ruling, the U.S. District Court for the Middle District of Florida ruled that Halifax’s contracts with its medical oncologists violated the Stark Law. The case was set for trial on March 3, 2014, on the government’s remaining claims against Halifax when the parties reached this settlement.
“This settlement illustrates our firm commitment to pursue health care fraud," said U.S. Attorney for the Middle District of Florida A. Lee Bentley III. “Medical service providers should be motivated, first and foremost, by what is best for their patients, not their pocketbooks. Where necessary, we will continue to investigate and pursue these violations in our district.”
As part of the settlement announced today, Halifax also has agreed to enter into a Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General (HHS-OIG), which obligates Halifax to undertake substantial internal compliance reforms and to submit its federal health care program claims to independent review for the next five years.
“Patients deserve to know that recommendations are based on sound medical practice, not illegal financial relationships between providers,” said Inspector General for the U.S. Department of Health and Human Services Daniel R. Levinson. “Halifax now also is required to hire a legal reviewer to monitor provider arrangements and an additional compliance expert to assist the board in fulfilling its oversight obligations. Both of these independent reviewers will submit regular reports to my agency.”
The settlement announced today stems from a whistleblower complaint filed by an employee of Halifax Hospital, Elin Baklid-Kunz, pursuant to the qui tam provisions of the False Claims Act, which permit private persons to bring a lawsuit on behalf of the government and to share in the proceeds of the suit. The Act also permits the government to intervene and take over the lawsuit, as it did in this case as to some of Baklid-Kunz’s allegations. Baklid-Kunz will receive $20.8 million of the settlement.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $19 billion through False Claims Act cases, with more than $13.4 billion of that amount recovered in cases involving fraud against federal health care programs.
The investigation and litigation was conducted by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Middle District of Florida and HHS-OIG. The claims settled by this agreement are allegations only, and there has been no determination of liability, except as determined by the court’s Nov. 13, 2013, ruling.
Tuesday, March 11, 2014
Florida Hospital System Agrees to Pay the Government $85 Million to Settle Allegations of Improper Financial Relationships with Referring Physicians
Halifax Hospital Medical Center and Halifax Staffing Inc. (Halifax), a hospital system based in the Daytona Beach, Fla., area, have agreed to pay $85 million to resolve allegations that they violated the False Claims Act by submitting claims to the Medicare program that violated the Physician Self-Referral Law, commonly known as the Stark Law, the Justice Department announced today.
The Stark Law forbids a hospital from billing Medicare for certain services referred by physicians who have a financial relationship with the hospital. In this case, the government alleged that Halifax knowingly violated the Stark Law by executing contracts with six medical oncologists that provided an incentive bonus that improperly included the value of prescription drugs and tests that the oncologists ordered and Halifax billed to Medicare. The government also alleged that Halifax knowingly violated the Stark Law by paying three neurosurgeons more than the fair market value of their work.
“Financial arrangements that compensate physicians for referrals encourage physicians to make decisions based on financial gain rather than patient needs,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “The Department of Justice is committed to preventing illegal financial relationships that undermine the integrity of our public health programs.”
In a Nov. 13, 2013, ruling, the U.S. District Court for the Middle District of Florida ruled that Halifax’s contracts with its medical oncologists violated the Stark Law. The case was set for trial on March 3, 2014, on the government’s remaining claims against Halifax when the parties reached this settlement.
“This settlement illustrates our firm commitment to pursue health care fraud," said U.S. Attorney for the Middle District of Florida A. Lee Bentley III. “Medical service providers should be motivated, first and foremost, by what is best for their patients, not their pocketbooks. Where necessary, we will continue to investigate and pursue these violations in our district.”
As part of the settlement announced today, Halifax also has agreed to enter into a Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General (HHS-OIG), which obligates Halifax to undertake substantial internal compliance reforms and to submit its federal health care program claims to independent review for the next five years.
“Patients deserve to know that recommendations are based on sound medical practice, not illegal financial relationships between providers,” said Inspector General for the U.S. Department of Health and Human Services Daniel R. Levinson. “Halifax now also is required to hire a legal reviewer to monitor provider arrangements and an additional compliance expert to assist the board in fulfilling its oversight obligations. Both of these independent reviewers will submit regular reports to my agency.”
The settlement announced today stems from a whistleblower complaint filed by an employee of Halifax Hospital, Elin Baklid-Kunz, pursuant to the qui tam provisions of the False Claims Act, which permit private persons to bring a lawsuit on behalf of the government and to share in the proceeds of the suit. The Act also permits the government to intervene and take over the lawsuit, as it did in this case as to some of Baklid-Kunz’s allegations. Baklid-Kunz will receive $20.8 million of the settlement.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $19 billion through False Claims Act cases, with more than $13.4 billion of that amount recovered in cases involving fraud against federal health care programs.
The investigation and litigation was conducted by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Middle District of Florida and HHS-OIG. The claims settled by this agreement are allegations only, and there has been no determination of liability, except as determined by the court’s Nov. 13, 2013, ruling.
Thursday, January 30, 2014
KENTUCKY HOSPITAL SETTLES ALLEGATIONS OF PERFORMING MEDICALLY UNNECESSARY CARDIAC PROCEDURES
FROM: JUSTICE DEPARTMENT
Wednesday, January 29, 2014
Kentucky Hospital Agrees to Pay Government $16.5 Million to Settle Allegations of Unnecessary Cardiac Procedures
Saint Joseph Health System Inc. has agreed to pay $16.5 million to resolve allegations that Saint Joseph Hospital violated the False Claims Act by submitting false claims to the Medicare and Kentucky Medicaid programs for a variety of medically unnecessary cardiac procedures, the Justice Department announced today. Saint Joseph Health System operates numerous hospitals statewide, including Saint Joseph Hospital, which is based in London, Ky.
“Hospitals that place their financial interests above the well-being of their patients will be held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “ The Department of Justice will not tolerate those who abuse federal health care programs and put the beneficiaries of these programs at risk.”
The government alleged that doctors working at Saint Joseph Hospital performed numerous invasive cardiac procedures, including coronary stents, pacemakers, coronary artery bypass graft surgeries and diagnostic catheterizations, on Medicare and Medicaid patients who did not need them, and that the hospital was aware of these unnecessary procedures. These doctors were affiliated with Cumberland Clinic which is a physician group that entered an exclusive arrangement with Saint Joseph Hospital in 2008 to provide cardiology services to the hospital’s patients. Cumberland Clinic is owned by two London-based cardiologists, Satyabrata Chatterjee and Ashwini Anand.
The settlement also resolves allegations that Saint Joseph Hospital violated the federal Stark Law and Anti-Kickback Statute by entering into sham management agreements that financially benefitted Chatterjee and Anand as an inducement for Chatterjee and Anand to direct more Cumberland Clinic patients to the hospital.
Dr. Sandesh Patil, one of the Cumberland Clinic cardiologists working at the hospital, performed many of the medically unnecessary coronary stents. Patil has since pleaded guilty to a federal health care fraud offense and has been sentenced to serve 30 months in prison.
“We all rely on health care providers to make treatment decisions based on clinical, not financial, considerations,” said U.S. Attorney for the Eastern District of Kentucky Kerry Harvey. “The conduct alleged in this case violates that fundamental trust and squanders scarce public resources set aside for legitimate health care needs. We will use every available tool to protect our federal health care programs and the patients who they serve.”
In connection with this settlement, Saint Joseph Hospital has agreed to enter into a Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General (HHS-OIG), which obligates the hospital to undertake substantial internal compliance reforms and to commit to a third-party review of its claims to federal health care programs for the next five years.
"Cases such as this threaten both the health of patients and the financial integrity of the Medicare and Medicaid programs," said Special Agent in Charge at the U.S. Department of Health and Human Services Office of Inspector General in Atlanta Derrick L. Jackson. "This settlement is another example of the OIG’s commitment to protecting our beneficiaries and to recovering any money that has been improperly paid as a result of medically unnecessary procedures."
In addition to the settlement with Saint Joseph Health System, the government announced its intervention in a lawsuit alleging False Claims Act violations by Chatterjee and Anand, who referred patients for and performed the unnecessary procedures and tests, and their practice group, Cumberland Clinic, as well the practice groups each of them owned before forming Cumberland Clinic.
The government actions announced today stem in large part from a whistleblower complaint filed by three Lexington, Ky., cardiologists pursuant to the qui tam provisions of the False Claims Act, which permit private persons to bring a lawsuit on behalf of the government and to share in the proceeds of the suit. The Act also permits the government to intervene in the lawsuit and take over the allegations as it has done in this case. Drs. Michael Jones, Paula Hollingsworth and Michael Rukavina will receive a total of $2.46 million of the $16.5 million settlement with Saint Joseph Hospital.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $17.1 billion through False Claims Act cases, with more than $12.2 billion of that amount recovered in cases involving fraud against federal health care programs.
The investigation was conducted by the FBI, HHS-OIG, the Kentucky Office of Attorney General, Medicaid Fraud and Abuse Control Unit, the Commercial Litigation Branch of the Department of Justice Civil Division and the U.S. Attorney’s Office for the Eastern District of Kentucky. The claims settled by this agreement are allegations only, and there has been no determination of liability.
The lawsuit is captioned United States ex rel. Jones, Hollingsworth and Rukavina v. Saint Joseph Health System et al., no. 11-cv-81-GFVT (E.D.Ky.)
Wednesday, January 29, 2014
Kentucky Hospital Agrees to Pay Government $16.5 Million to Settle Allegations of Unnecessary Cardiac Procedures
Saint Joseph Health System Inc. has agreed to pay $16.5 million to resolve allegations that Saint Joseph Hospital violated the False Claims Act by submitting false claims to the Medicare and Kentucky Medicaid programs for a variety of medically unnecessary cardiac procedures, the Justice Department announced today. Saint Joseph Health System operates numerous hospitals statewide, including Saint Joseph Hospital, which is based in London, Ky.
“Hospitals that place their financial interests above the well-being of their patients will be held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “ The Department of Justice will not tolerate those who abuse federal health care programs and put the beneficiaries of these programs at risk.”
The government alleged that doctors working at Saint Joseph Hospital performed numerous invasive cardiac procedures, including coronary stents, pacemakers, coronary artery bypass graft surgeries and diagnostic catheterizations, on Medicare and Medicaid patients who did not need them, and that the hospital was aware of these unnecessary procedures. These doctors were affiliated with Cumberland Clinic which is a physician group that entered an exclusive arrangement with Saint Joseph Hospital in 2008 to provide cardiology services to the hospital’s patients. Cumberland Clinic is owned by two London-based cardiologists, Satyabrata Chatterjee and Ashwini Anand.
The settlement also resolves allegations that Saint Joseph Hospital violated the federal Stark Law and Anti-Kickback Statute by entering into sham management agreements that financially benefitted Chatterjee and Anand as an inducement for Chatterjee and Anand to direct more Cumberland Clinic patients to the hospital.
Dr. Sandesh Patil, one of the Cumberland Clinic cardiologists working at the hospital, performed many of the medically unnecessary coronary stents. Patil has since pleaded guilty to a federal health care fraud offense and has been sentenced to serve 30 months in prison.
“We all rely on health care providers to make treatment decisions based on clinical, not financial, considerations,” said U.S. Attorney for the Eastern District of Kentucky Kerry Harvey. “The conduct alleged in this case violates that fundamental trust and squanders scarce public resources set aside for legitimate health care needs. We will use every available tool to protect our federal health care programs and the patients who they serve.”
In connection with this settlement, Saint Joseph Hospital has agreed to enter into a Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General (HHS-OIG), which obligates the hospital to undertake substantial internal compliance reforms and to commit to a third-party review of its claims to federal health care programs for the next five years.
"Cases such as this threaten both the health of patients and the financial integrity of the Medicare and Medicaid programs," said Special Agent in Charge at the U.S. Department of Health and Human Services Office of Inspector General in Atlanta Derrick L. Jackson. "This settlement is another example of the OIG’s commitment to protecting our beneficiaries and to recovering any money that has been improperly paid as a result of medically unnecessary procedures."
In addition to the settlement with Saint Joseph Health System, the government announced its intervention in a lawsuit alleging False Claims Act violations by Chatterjee and Anand, who referred patients for and performed the unnecessary procedures and tests, and their practice group, Cumberland Clinic, as well the practice groups each of them owned before forming Cumberland Clinic.
The government actions announced today stem in large part from a whistleblower complaint filed by three Lexington, Ky., cardiologists pursuant to the qui tam provisions of the False Claims Act, which permit private persons to bring a lawsuit on behalf of the government and to share in the proceeds of the suit. The Act also permits the government to intervene in the lawsuit and take over the allegations as it has done in this case. Drs. Michael Jones, Paula Hollingsworth and Michael Rukavina will receive a total of $2.46 million of the $16.5 million settlement with Saint Joseph Hospital.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $17.1 billion through False Claims Act cases, with more than $12.2 billion of that amount recovered in cases involving fraud against federal health care programs.
The investigation was conducted by the FBI, HHS-OIG, the Kentucky Office of Attorney General, Medicaid Fraud and Abuse Control Unit, the Commercial Litigation Branch of the Department of Justice Civil Division and the U.S. Attorney’s Office for the Eastern District of Kentucky. The claims settled by this agreement are allegations only, and there has been no determination of liability.
The lawsuit is captioned United States ex rel. Jones, Hollingsworth and Rukavina v. Saint Joseph Health System et al., no. 11-cv-81-GFVT (E.D.Ky.)
ASSISTANT AG DELERY'S ADDRESSES CBI PHARMACEUTICAL COMPLIANCE CONGRESS
FROM: JUSTICE DEPARTMENT
Assistant Attorney General Stuart F. Delery Delivers the Keynote Address at the CBI Pharmaceutical Compliance Congress
Washington, DC ~ Wednesday, January 29, 2014
Thank you, Cindy [Cetani, Chief Compliance Officer of Novartis Pharmaceuticals Corporation]. And thank you to the Pharma Congress co-chairs and organizers for inviting me to be here this morning.
I am especially pleased to have the chance to speak to you at a gathering dedicated to compliance in the pharmaceutical industry. As head of the Civil Division at the Department of Justice, I oversee much of the federal government’s civil litigation in courts across the country. Attorneys in the Civil Division litigate cases involving national security and immigration policy. They defend federal statutes, regulations, and programs, ranging from the Affordable Care Act to actions taken in response to the financial crisis.
Yet among these significant matters, one of my top priorities is the work the Civil Division does to enforce the Food, Drug, and Cosmetic Act; the False Claims Act; and other laws protecting the safety and well-being of patients and the general public.
Why is health care enforcement so important? A major reason is the importance of the health care industry itself. From compliance officers to physicians, from corporate executives to nurses and researchers, you contribute to producing the drugs and medical devices on which we and our loved ones rely. Your efforts help to ensure that, when we are sick, the medicines we take will heal us effectively; that when we are in pain, we can obtain relief safely.
This Administration shares your commitment to improving the nation’s health care system. It has undertaken a comprehensive effort to ensure that more people have access to quality coverage, and that treatments are available at a lower cost to all of us – to patients, to health care providers, and to taxpayers. The innovative reforms and anti-fraud measures under the Affordable Care Act are a part of this effort.
So, too, is the Health Care Fraud Prevention and Enforcement Action Team, or HEAT, a cabinet-level initiative to increase coordination between the Civil Division and our partners at the Food and Drug Administration, the Centers for Medicare and Medicaid Services, and U.S. Attorneys’ offices around the country. This coordination has produced historic results. Since 2009, judgments and settlements under the FCA and FDCA have totaled over $20 billion.
But monetary results tell only part of the story.
Through our enforcement efforts, the government aims to promote an environment in which all of us can count on the soundness and efficiency of the health care system. If a pharmaceutical company pays kickbacks to physicians who prescribe its drugs, patients lose confidence that their doctors are making independent judgments about treatment options. If a Medicare provider bills for unnecessary services, taxpayers lose faith that our money is being well spent and health care becomes more expensive for everyone. If a manufacturer markets its products for uses that were never approved as safe and effective by the FDA, we worry that our loved ones might be receiving treatments that will harm them rather than help them, and that they may not elect the treatment with the best chance for a cure.
We are pursuing a broader range of health care fraud matters than ever before. We have cracked down on elder abuse in nursing homes, bringing criminal and civil cases against companies that harm seniors by providing grossly deficient care. We have pursued doctors who put patients at risk by performing unnecessary procedures to increase their bills, like a Florida dermatologist who performed thousands of unnecessary skin surgeries, participated in an illegal kickback scheme, and ultimately paid one of the largest False Claims Act settlements ever by an individual – $26.1 million. We have gone after the manufacturers of defective medicines or medical devices, as in our criminal and civil cases against a Boston Scientific subsidiary for knowingly selling defective cardiac defibrillators. We have sued companies that produce sterile products in non-sterile conditions, risking contamination and threatening patients with the possibility of dangerous infections. In short, we have demonstrated a commitment to targeting health care fraud and abuse wherever we find it.
By going after the practices that shake our trust in the marketplace and risk harm to us when we need medical care, we seek to make our health care system work better.
And in that respect, we all need to be allies and partners. When the focus is on financial recoveries, or on a specific investigation, it is easy to think of government and industry as adversaries. But when the goal is ensuring that Americans can trust the drugs they take and the medical advice they receive, it is clear that we are on the same side, attempting to stop unlawful practices that affect the safety and affordability of pharmaceuticals and medical devices.
And so I want to focus my remarks on three ways in which I believe the Civil Division’s anti-fraud enforcement interests align with your interests as corporate compliance officers, executives, and advisors.
First, we have a common interest in promoting an ethical corporate culture instead of maintaining a compliance program in name only.
No matter how well-designed a compliance program is, it cannot achieve its goals without achieving buy-in at all levels of the company. People must have the right incentives to see, report, and fix problems.
A common thread in many of our cases is that numerous individuals – ranging from executives to safety technicians – saw signs that misconduct was taking place and did not act. For example, in May 2013 the generic drug manufacturer Ranbaxy pleaded guilty to felony charges relating to producing and distributing adulterated drugs from two of its manufacturing facilities in India. Ranbaxy acknowledged that it had continued to distribute drugs that had failed critical tests, violated current Good Manufacturing Practices, and falsified records to cover up systematically incomplete testing, sometimes performing stability tests weeks or months after the dates reported to the FDA.
The conduct that gave rise to Ranbaxy’s guilty plea took place over a period of years, during which the company received early warnings that something was wrong. The company hired auditors and started to investigate evidence of abuses. But its actions never translated into real change. Four years after the first signs of trouble, those problems led the company to distribute an epilepsy drug that failed tests, had unknown impurities, and would not maintain its expected shelf life. The ultimate result was a $500 million resolution – the largest drug safety settlement ever with a generic drug manufacturer.
A scenario like this is, in many ways, a compliance officer’s worst nightmare. And it demonstrates how a company can have the tools it needs to avoid violations of law, and yet have such violations happen anyway. To be sure, Ranbaxy’s compliance operation could have done more than it did – its auditors, for instance, said that the company badly needed cGMP training; that training never happened. But policies alone are not enough.
That is why we have put a renewed emphasis on identifying non-monetary measures that will help us to prevent the recurrence of misconduct. That happened with Ranbaxy, where an earlier civil consent decree called, among other things, for the company to establish an Office of Data Reliability that would work with its manufacturing, testing, approval, and compliance operations to ensure that all future drug applications are audited for accuracy before submission. Indeed, just last week, the consent decree allowed FDA to move swiftly and respond forcefully when it learned of problems at yet another Ranbaxy facility.
Non-monetary measures were also a key feature of our $1.5 billion criminal and civil resolution in 2012 with Abbott Laboratories for conduct relating to its epilepsy drug Depakote. Working with the company and with our partners in Office of the Inspector General of the Department of Health and Human Services, we crafted a resolution designed to ensure high-level accountability for the company’s compliance efforts. It imposes a term of probation for five years which requires Abbott to report any probable violations of the FDCA, and requires that its CEO personally certify compliance with this reporting requirement. It contains a corporate integrity agreement with the HHS-OIG that requires, among other things, Abbott’s board of directors to review the efficacy of the company’s compliance effort. And it demands that Abbott institute policies to ensure that its scientific research and publications foster increased understanding of scientific, clinical, or healthcare issues.
As these settlements have made clear, we are not interested in merely collecting a large fine and moving on to the next case. We strive to give companies the incentives – and the tools – to craft better compliance practices in the future. And we want to work together with you, the people most responsible for compliance, to achieve real change.
The second common interest between the government and industry that I want to highlight is transparency about the conduct we investigate.
The impact of the cases we bring extends beyond the individuals and companies whose wrongdoing is at issue. Given the size, scope and reach of the pharmaceutical industry, we recognize that our efforts can have a profound impact, not only on the pharmaceutical industry, but also on the lives of countless Americans. Each victory we achieve in fighting a single instance of fraud helps to deter others from following the same path.
In order for this comprehensive approach to be successful, we must be clear about what misconduct gave rise to a criminal or civil resolution. As a result, we continue to emphasize the importance of explaining the conduct that has given rise to the settlements we negotiate.
That kind of transparency benefits the industry by clarifying the factual basis for the actions we take. And it benefits the American people by maximizing the impact of each dollar spent on health care fraud prevention and by prompting other companies to avoid the same risks to patient health and safety.
Being transparent about our enforcement efforts also means distinguishing conduct that is lawful and even beneficial from conduct that is illegal and harmful. For example, we recognize the value of giving doctors the freedom to decide, in consultation with their patients, what treatments to use. And we acknowledge the importance of an open dialogue in which pharmaceutical companies and physicians share truthful information about a product’s likely effects.
That said, where a company crosses the line and distributes its products intending them to be used in ways that are not approved as safe and effective by the FDA, we will act aggressively.
Many of you are familiar with November’s $2.2 billion settlement with Johnson & Johnson. In that case, the government alleged, among other things, that a J&J subsidiary, Janssen Pharmaceuticals, distributed the antipsychotic drug Risperdal to the nation’s most vulnerable patients – elderly nursing home residents, children, and individuals with mental disabilities – for uses that the FDA had never approved. Indeed, according to the government, Janssen distributed the drug to health care providers for elderly, non-schizophrenic dementia patients despite knowing that those uses were not approved and that the drug posed serious health risks to the elderly, including an increased risk of stroke.
Misbranding like this undermines the regulatory regime that we rely on to ensure that medicines and medical devices are safe. And it can have catastrophic consequences for patients. That is why the government will continue to bring these cases, and why we think it is so important that the public – and the industry in particular – understand the conduct at issue.
Finally, third, we have a common interest in ensuring that corporate compliance not only is the right thing to do but also is a winning business strategy.
That means pursuing companies that seek an unfair advantage by breaking the law. The World Health Organization, for example, estimates that more than half of the drugs sold online are counterfeit and contain useless or even harmful ingredients. And so the Civil Division has a team of attorneys who pursue counterfeit pharmaceutical fraud. These efforts are critical to protecting the millions of Americans who purchase their medications through online pharmacies. But they are also critical to protecting the legitimate businesses that suffer when fraudulent conduct distorts the marketplace. We want to ensure that companies that are committed to doing things right have the opportunity to compete on a level playing field.
Rewarding compliance also means acknowledging when companies and individuals do the right thing and voluntarily disclose wrongdoing. We recognize that most pharmaceutical companies are trying to play by the rules, that navigating the health care landscape is not always easy, and that many companies and individuals do their best to get it right.
We want to make clear that the decision to come forward is the right one. When a company or individual acts responsibly by timely and voluntarily disclosing unlawful conduct, we will give serious consideration to that disclosure in deciding whether or how to charge or resolve the matter. Likewise, we will credit actions taken once the government has started to investigate.
Of course, each case is unique, so there is no one formula for cooperation – just as there is no formula for the penalty for wrongdoing. But if we all aim to encourage a culture of compliance, to implement policies that can identify problems early, and to work together when fraud is found, your companies and your customers will be in the best possible position.
I want to close by emphasizing how seriously the Justice Department takes its responsibility to ensure that fraud does not pay – to ensure that all of you who encourage your organizations to act ethically are rewarded for doing so.
We reject the pernicious idea that a company can succeed by violating the law and treating health care fraud enforcement as a cost of doing business. We continue to insist on resolutions that eliminate any economic incentive to engage in and attempt to conceal unlawful conduct. We continue to seek criminal penalties, against both companies and individuals, under appropriate circumstances. We continue to demand accountability by vigilantly enforcing federal laws against those who seek an unfair advantage at the expense of patients and taxpayers.
A competitive health care marketplace, undistorted by fraud, is good for providers as well as patients. That is why I am so pleased to be here and so convinced that events such as this are vital. These gatherings enhance our respective practices and our understanding of our respective positions. They allow all of us to consider new ideas and varying perspectives. And they allow us to explore new ways to work together to enhance Americans’ trust in their health care systems.
I thank the organizers for the chance to address these issues with you, and I look forward to continuing to work with all of you in the future.
Thank you.
Assistant Attorney General Stuart F. Delery Delivers the Keynote Address at the CBI Pharmaceutical Compliance Congress
Washington, DC ~ Wednesday, January 29, 2014
Thank you, Cindy [Cetani, Chief Compliance Officer of Novartis Pharmaceuticals Corporation]. And thank you to the Pharma Congress co-chairs and organizers for inviting me to be here this morning.
I am especially pleased to have the chance to speak to you at a gathering dedicated to compliance in the pharmaceutical industry. As head of the Civil Division at the Department of Justice, I oversee much of the federal government’s civil litigation in courts across the country. Attorneys in the Civil Division litigate cases involving national security and immigration policy. They defend federal statutes, regulations, and programs, ranging from the Affordable Care Act to actions taken in response to the financial crisis.
Yet among these significant matters, one of my top priorities is the work the Civil Division does to enforce the Food, Drug, and Cosmetic Act; the False Claims Act; and other laws protecting the safety and well-being of patients and the general public.
Why is health care enforcement so important? A major reason is the importance of the health care industry itself. From compliance officers to physicians, from corporate executives to nurses and researchers, you contribute to producing the drugs and medical devices on which we and our loved ones rely. Your efforts help to ensure that, when we are sick, the medicines we take will heal us effectively; that when we are in pain, we can obtain relief safely.
This Administration shares your commitment to improving the nation’s health care system. It has undertaken a comprehensive effort to ensure that more people have access to quality coverage, and that treatments are available at a lower cost to all of us – to patients, to health care providers, and to taxpayers. The innovative reforms and anti-fraud measures under the Affordable Care Act are a part of this effort.
So, too, is the Health Care Fraud Prevention and Enforcement Action Team, or HEAT, a cabinet-level initiative to increase coordination between the Civil Division and our partners at the Food and Drug Administration, the Centers for Medicare and Medicaid Services, and U.S. Attorneys’ offices around the country. This coordination has produced historic results. Since 2009, judgments and settlements under the FCA and FDCA have totaled over $20 billion.
But monetary results tell only part of the story.
Through our enforcement efforts, the government aims to promote an environment in which all of us can count on the soundness and efficiency of the health care system. If a pharmaceutical company pays kickbacks to physicians who prescribe its drugs, patients lose confidence that their doctors are making independent judgments about treatment options. If a Medicare provider bills for unnecessary services, taxpayers lose faith that our money is being well spent and health care becomes more expensive for everyone. If a manufacturer markets its products for uses that were never approved as safe and effective by the FDA, we worry that our loved ones might be receiving treatments that will harm them rather than help them, and that they may not elect the treatment with the best chance for a cure.
We are pursuing a broader range of health care fraud matters than ever before. We have cracked down on elder abuse in nursing homes, bringing criminal and civil cases against companies that harm seniors by providing grossly deficient care. We have pursued doctors who put patients at risk by performing unnecessary procedures to increase their bills, like a Florida dermatologist who performed thousands of unnecessary skin surgeries, participated in an illegal kickback scheme, and ultimately paid one of the largest False Claims Act settlements ever by an individual – $26.1 million. We have gone after the manufacturers of defective medicines or medical devices, as in our criminal and civil cases against a Boston Scientific subsidiary for knowingly selling defective cardiac defibrillators. We have sued companies that produce sterile products in non-sterile conditions, risking contamination and threatening patients with the possibility of dangerous infections. In short, we have demonstrated a commitment to targeting health care fraud and abuse wherever we find it.
By going after the practices that shake our trust in the marketplace and risk harm to us when we need medical care, we seek to make our health care system work better.
And in that respect, we all need to be allies and partners. When the focus is on financial recoveries, or on a specific investigation, it is easy to think of government and industry as adversaries. But when the goal is ensuring that Americans can trust the drugs they take and the medical advice they receive, it is clear that we are on the same side, attempting to stop unlawful practices that affect the safety and affordability of pharmaceuticals and medical devices.
And so I want to focus my remarks on three ways in which I believe the Civil Division’s anti-fraud enforcement interests align with your interests as corporate compliance officers, executives, and advisors.
First, we have a common interest in promoting an ethical corporate culture instead of maintaining a compliance program in name only.
No matter how well-designed a compliance program is, it cannot achieve its goals without achieving buy-in at all levels of the company. People must have the right incentives to see, report, and fix problems.
A common thread in many of our cases is that numerous individuals – ranging from executives to safety technicians – saw signs that misconduct was taking place and did not act. For example, in May 2013 the generic drug manufacturer Ranbaxy pleaded guilty to felony charges relating to producing and distributing adulterated drugs from two of its manufacturing facilities in India. Ranbaxy acknowledged that it had continued to distribute drugs that had failed critical tests, violated current Good Manufacturing Practices, and falsified records to cover up systematically incomplete testing, sometimes performing stability tests weeks or months after the dates reported to the FDA.
The conduct that gave rise to Ranbaxy’s guilty plea took place over a period of years, during which the company received early warnings that something was wrong. The company hired auditors and started to investigate evidence of abuses. But its actions never translated into real change. Four years after the first signs of trouble, those problems led the company to distribute an epilepsy drug that failed tests, had unknown impurities, and would not maintain its expected shelf life. The ultimate result was a $500 million resolution – the largest drug safety settlement ever with a generic drug manufacturer.
A scenario like this is, in many ways, a compliance officer’s worst nightmare. And it demonstrates how a company can have the tools it needs to avoid violations of law, and yet have such violations happen anyway. To be sure, Ranbaxy’s compliance operation could have done more than it did – its auditors, for instance, said that the company badly needed cGMP training; that training never happened. But policies alone are not enough.
That is why we have put a renewed emphasis on identifying non-monetary measures that will help us to prevent the recurrence of misconduct. That happened with Ranbaxy, where an earlier civil consent decree called, among other things, for the company to establish an Office of Data Reliability that would work with its manufacturing, testing, approval, and compliance operations to ensure that all future drug applications are audited for accuracy before submission. Indeed, just last week, the consent decree allowed FDA to move swiftly and respond forcefully when it learned of problems at yet another Ranbaxy facility.
Non-monetary measures were also a key feature of our $1.5 billion criminal and civil resolution in 2012 with Abbott Laboratories for conduct relating to its epilepsy drug Depakote. Working with the company and with our partners in Office of the Inspector General of the Department of Health and Human Services, we crafted a resolution designed to ensure high-level accountability for the company’s compliance efforts. It imposes a term of probation for five years which requires Abbott to report any probable violations of the FDCA, and requires that its CEO personally certify compliance with this reporting requirement. It contains a corporate integrity agreement with the HHS-OIG that requires, among other things, Abbott’s board of directors to review the efficacy of the company’s compliance effort. And it demands that Abbott institute policies to ensure that its scientific research and publications foster increased understanding of scientific, clinical, or healthcare issues.
As these settlements have made clear, we are not interested in merely collecting a large fine and moving on to the next case. We strive to give companies the incentives – and the tools – to craft better compliance practices in the future. And we want to work together with you, the people most responsible for compliance, to achieve real change.
The second common interest between the government and industry that I want to highlight is transparency about the conduct we investigate.
The impact of the cases we bring extends beyond the individuals and companies whose wrongdoing is at issue. Given the size, scope and reach of the pharmaceutical industry, we recognize that our efforts can have a profound impact, not only on the pharmaceutical industry, but also on the lives of countless Americans. Each victory we achieve in fighting a single instance of fraud helps to deter others from following the same path.
In order for this comprehensive approach to be successful, we must be clear about what misconduct gave rise to a criminal or civil resolution. As a result, we continue to emphasize the importance of explaining the conduct that has given rise to the settlements we negotiate.
That kind of transparency benefits the industry by clarifying the factual basis for the actions we take. And it benefits the American people by maximizing the impact of each dollar spent on health care fraud prevention and by prompting other companies to avoid the same risks to patient health and safety.
Being transparent about our enforcement efforts also means distinguishing conduct that is lawful and even beneficial from conduct that is illegal and harmful. For example, we recognize the value of giving doctors the freedom to decide, in consultation with their patients, what treatments to use. And we acknowledge the importance of an open dialogue in which pharmaceutical companies and physicians share truthful information about a product’s likely effects.
That said, where a company crosses the line and distributes its products intending them to be used in ways that are not approved as safe and effective by the FDA, we will act aggressively.
Many of you are familiar with November’s $2.2 billion settlement with Johnson & Johnson. In that case, the government alleged, among other things, that a J&J subsidiary, Janssen Pharmaceuticals, distributed the antipsychotic drug Risperdal to the nation’s most vulnerable patients – elderly nursing home residents, children, and individuals with mental disabilities – for uses that the FDA had never approved. Indeed, according to the government, Janssen distributed the drug to health care providers for elderly, non-schizophrenic dementia patients despite knowing that those uses were not approved and that the drug posed serious health risks to the elderly, including an increased risk of stroke.
Misbranding like this undermines the regulatory regime that we rely on to ensure that medicines and medical devices are safe. And it can have catastrophic consequences for patients. That is why the government will continue to bring these cases, and why we think it is so important that the public – and the industry in particular – understand the conduct at issue.
Finally, third, we have a common interest in ensuring that corporate compliance not only is the right thing to do but also is a winning business strategy.
That means pursuing companies that seek an unfair advantage by breaking the law. The World Health Organization, for example, estimates that more than half of the drugs sold online are counterfeit and contain useless or even harmful ingredients. And so the Civil Division has a team of attorneys who pursue counterfeit pharmaceutical fraud. These efforts are critical to protecting the millions of Americans who purchase their medications through online pharmacies. But they are also critical to protecting the legitimate businesses that suffer when fraudulent conduct distorts the marketplace. We want to ensure that companies that are committed to doing things right have the opportunity to compete on a level playing field.
Rewarding compliance also means acknowledging when companies and individuals do the right thing and voluntarily disclose wrongdoing. We recognize that most pharmaceutical companies are trying to play by the rules, that navigating the health care landscape is not always easy, and that many companies and individuals do their best to get it right.
We want to make clear that the decision to come forward is the right one. When a company or individual acts responsibly by timely and voluntarily disclosing unlawful conduct, we will give serious consideration to that disclosure in deciding whether or how to charge or resolve the matter. Likewise, we will credit actions taken once the government has started to investigate.
Of course, each case is unique, so there is no one formula for cooperation – just as there is no formula for the penalty for wrongdoing. But if we all aim to encourage a culture of compliance, to implement policies that can identify problems early, and to work together when fraud is found, your companies and your customers will be in the best possible position.
I want to close by emphasizing how seriously the Justice Department takes its responsibility to ensure that fraud does not pay – to ensure that all of you who encourage your organizations to act ethically are rewarded for doing so.
We reject the pernicious idea that a company can succeed by violating the law and treating health care fraud enforcement as a cost of doing business. We continue to insist on resolutions that eliminate any economic incentive to engage in and attempt to conceal unlawful conduct. We continue to seek criminal penalties, against both companies and individuals, under appropriate circumstances. We continue to demand accountability by vigilantly enforcing federal laws against those who seek an unfair advantage at the expense of patients and taxpayers.
A competitive health care marketplace, undistorted by fraud, is good for providers as well as patients. That is why I am so pleased to be here and so convinced that events such as this are vital. These gatherings enhance our respective practices and our understanding of our respective positions. They allow all of us to consider new ideas and varying perspectives. And they allow us to explore new ways to work together to enhance Americans’ trust in their health care systems.
I thank the organizers for the chance to address these issues with you, and I look forward to continuing to work with all of you in the future.
Thank you.
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