TWO ORTHOPEDIC CLINICS TO PAY $1.85 MILLION TO SETTLE FALSE CLAIMS ACT ALLEGATIONS

FROM:  JUSTICE DEPARTMENT 
Friday, January 24, 2014
Tennessee and Virginia Orthopedic Clinics to Pay $1.85 Million to Settle Allegations of Billing Medicare for Reimported Products

Two orthopedic clinics will pay a combined $1.85 million to resolve state and federal False Claims Act allegations that they knowingly billed state and federal health care programs for reimported osteoarthritis medications, known as viscosupplements, the Department of Justice announced today.  Tennessee Orthopaedic Clinics P.C., headquartered in Knoxville, Tenn., will pay $1.3 million, and Appalachian Orthopaedic Clinics P.C., headquartered in Kingsport, Tenn., will pay $550,000.

“The Department of Justice will not tolerate the conduct of companies that impermissibly shift risks onto patients in order to increase their own profits,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “The department is committed to maintaining the integrity of the health care system, ensuring that patients receive drugs and devices that are safe and effective and taking action against companies that take chances with the health of consumers so as to improve their own bottom lines.”

Viscosupplements, such as Synvisc and Orthovisc, are injections approved by the Food and Drug Administration for the treatment of osteoarthritis pain in the knee.  Viscosupplements are reimbursed by Medicare, Medicaid and other federal health care programs at a set rate based on the average sales price of the domestic product.  The government contended that the clinics knowingly purchased deeply discounted viscosupplements that were reimported from foreign countries and billed them to state and federal health care programs in order to profit from the reimbursement system, when such reimported viscosupplements were not reimbursable by those programs.  Allegedly, the reimported product included labeling in foreign languages and in English for additional uses not approved in the United States, which demonstrated that the product was reimported.  Moreover, because the product was reimported, the government alleged there was no manufacturer assurance that it had not been tampered with or that it was stored appropriately.  

“This scheme is yet another example of illegal actions by health care providers to profit from drugs imported into the United States,” said U.S. Attorney for the Eastern District of Tennessee William C. Killian.  “Medicare and FDA requirements are designed to prevent potential harm to patients.  Noncompliance with the law to increase profit at the risk of patients will be pursued by the Department of Justice.”
         
“Attempts to increase profits by circumventing the law will not be tolerated,” said Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General in Atlanta Derrick L. Jackson.  “Health care providers buying cut-rate, cheap drugs from foreign sources will end up paying a steep price.”

The allegations resolved by the settlement were first raised in a lawsuit filed against the clinics under the qui tam, or whistleblower, provisions of the False Claims Act by Douglas Estey, a physician’s assistant who was occasionally paid by Genzyme Corp. to speak to medical providers about the use of Synvisc.  The Act allows private citizens with knowledge of fraud to bring civil actions on behalf of the government and to share in any recovery.  Estey will receive $323,750.

The government’s investigation was a coordinated effort by the Civil Division of the Department of Justice, the U.S. Attorney’s Office for the Eastern District of Tennessee, the Department of Health and Human Services Office of Inspector General and Office of General Counsel, the Food and Drug Administration Office of Criminal Investigations and Office of Chief Counsel, the Federal Bureau of Investigation and the Tennessee Bureau of Investigation.

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 case is captioned United States ex rel. Estey v. Tennessee Orthopaedic Clinics P.C., Appalachian Orthopaedic Associates P.C. and Appalachian Orthopaedic Partners LLC, Docket No. 3:12-cv-85 Varlan/Guyton.  The claims settled by these agreements are allegations only; there have been no determinations of liability.  

FLORIDA VEIN CLINIC AGREES TO PAY $400,000 TO RESOLVE FALSE CLAIMS ACT ALLEGATIONS

FROM:  U.S. JUSTICE DEPARTMENT

FOR IMMEDIATE RELEASE
Tuesday, January 7, 2014
United States Government Settles False Claims Act Allegations Against Florida Vein Clinic and Its Owner

A Florida-based physician, Dr. Ravi Sharma, has agreed to pay $400,000 to resolve allegations that he and his clinics violated the False Claims Act by knowingly billing Medicare for vein injections and physician office visits performed by unqualified personnel, the Justice Department announced today.

“Vein injections and other invasive procedures should be performed by appropriately qualified personnel,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.   “We will not tolerate those who put patients’ health at risk for their personal gain and convenience.”  

The government alleged that, between 2009 and 2010, Sharma owned and operated a clinic in the Tampa area called Premier Vein Centers.   Beginning in 2009, Sharma allegedly sent text messages to his office manager instructing her to perform varicose vein injections on patients when he was not in the office.   The government further alleged that, when Sharma was in the office, he performed unnecessary vein injections and unnecessary ultrasound imaging procedures associated with those vein injections.

Sharma also owned and operated, between 2009 and 2010, a weight loss clinic in the Tampa area called Life’s New Image.   Allegedly, unqualified personnel met with patients of the clinic, but Sharma billed those visits as physician office visits using his own Medicare provider number.   Sharma closed Premier Vein Centers and Life’s New Image in 2010.

“We are pleased to announce this very favorable resolution of our claims against this provider,” said Acting U.S. Attorney for the Middle District of Florida A. Lee Bentley III.   “Again, it demonstrates our commitment to civil health care fraud enforcement in our district.”

The allegations covered by the settlement were originally raised in a lawsuit filed by Patti Lovell, the former office manager for Sharma, under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for the submission of false claims and to receive a share of any recovery.   Lovell will receive $72,000.

As part of the settlement, Sharma entered into a three-year Integrity Agreement with the Office of Inspector General of the Department of Health and Human Services.   The agreement requires Sharma to attend training courses provided by the Centers for Medicare and Medicaid Services and provides for an independent external review of his federal health care program coding and billing procedures.

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 Health and Human Services Secretary 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 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 of this matter reflects a coordinated effort among the Commercial Litigation Branch of the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Middle District of Florida and the Department of Health and Human Services Office of Inspector General.

The lawsuit is captioned U.S. ex rel. Lovell v. Ravi Sharma, M.D. and Premier Vein Centers, 12-CV-133 (M.D. Fla.).   The claims resolved by the settlement are allegations only, and there has been no determination of liability.

HEALTH CARE ORG. & HOSPITAL TO PAY $3.85 MILLION FOR PROVIDING KICKBACKS FOR DOCTOR REFERRALS

FROM:  U.S. JUSTICE DEPARTMENT FINANCIAL 
Tuesday, December 31, 2013
Colorado Health Care Organization and One of Its Montana Hospitals to Pay $3.85 Million for Allegedly Providing Financial Benefits to Referring Physicians and Physician Groups

St. James Healthcare (St. James), a hospital located in Butte, Mont., and its parent company, Sisters of Charity of Leavenworth Health System (Sisters of Charity), a health care organization based in Denver, Colo., have agreed to pay $3.85 million to resolve allegations that they violated the Anti-Kickback Statute, the Stark Law and the False Claims Act by improperly providing financial benefits to physicians and physician groups that made referrals to the hospital, the Justice Department announced today.

The Anti-Kickback Statute prohibits the provision of remuneration with the intent to induce referrals of government health care program business.  The Stark Law restricts financial relationships that hospitals may enter into with physicians who refer patients to them.  Federal law prohibits payment by federal health care programs of medical claims that result from arrangements that violate the Anti-Kickback Statute or the Stark Law.

“Improper financial arrangements between hospitals and physicians not only undermine the integrity of the decisions that doctors make, they raise the cost of health care for all of us,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “The department has longstanding concerns about such conduct and is committed to working with health care providers that come forward to disclose their misconduct.”

The settlement announced today resolves allegations that St. James and Sisters of Charity provided various improper financial incentives to physicians and physician groups that were involved in a joint venture with St. James to own and operate a medical office building on the St. James campus.  These incentives included a payment to the joint venture that increased the share values for the physicians and physician groups in the joint venture and resulted in below fair market value lease rates for the physicians renting space in the medical office building.  Additional incentives provided by St. James and Sisters of Charity included below fair market value lease rates for the land upon which the medical office building was constructed and other below fair market value arrangements related to shared facilities, use and maintenance.  These issues were disclosed by St. James and Sisters of Charity to the government.

“This matter is of great significance to Montanans because it helps ensure federal health care programs deliver services in a cost-effective and efficient manner,” said U.S. Attorney for the District of Montana Michael W. Cotter.  “We are encouraged that hospitals like St. James Healthcare are taking these issues seriously by reviewing their operations and making disclosures to the government where necessary.”

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 Health and Human Services Secretary Kathleen Sebelius.  The partnership between the two departments has focused on 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 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.

This case was handled by the U.S. Attorney’s Office for the District of Montana, the Department of Justice Civil Division, Commercial Litigation Branch and the 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.

ABBOTT LABS PAYS NEARLY $5.5 MILLION TO SETTLE PHYSICIAN KICKBACK CLAIMS

FROM:  U.S. JUSTICE DEPARTMENT 
Friday, December 27, 2013
Abbott Laboratories Pays U.S. $5.475 Million to Settle Claims That Company Paid Kickbacks to Physicians

Abbott Laboratories has agreed to pay the United States $5.475 million to resolve allegations that it violated the False Claims Act by paying kickbacks to induce doctors to implant the company’s carotid, biliary and peripheral vascular products, the Justice Department announced today.  Abbott is a global pharmaceuticals and health care products company based in Abbott Park, Ill.

“Patients have a right to treatment decisions that are based on their own medical needs, not the personal financial interests of their health care providers,” said Assistant Attorney General Stuart F. Delery of the Civil Division of the Department of Justice.  “Kickbacks undermine the ability of health care providers to objectively evaluate and treat their patients, and will continue to be a primary focus of the Department’s health care enforcement efforts.”

The settlement resolves allegations that Abbott knowingly paid prominent physicians for teaching assignments, speaking engagements and conferences with the expectation that these physicians would arrange for the hospitals with which they were affiliated to purchase Abbott’s carotid, biliary and peripheral vascular products.  As a result, the United States alleged Abbott violated the Anti-Kickback Act and caused the submission of false claims to Medicare for the procedures in which these Abbott products were used.

“Physicians should make decisions regarding medical devices based on what is in the best interest of patients without being induced by payments from manufacturers competing for their business,” said U.S. Attorney Bill Killian of the Eastern District of Tennessee.

“Offering financial inducements can distort health care decision-making,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services, Office of Inspector General in Atlanta.  “OIG and our law enforcement partners vigilantly protect government health programs from such alleged abuses.”

Carotid and peripheral vascular products are used to treat circulatory disorders by increasing blood flow to the head and various parts of the body, respectively.  Biliary products are used to treat obstructions that occur in the bile ducts.

The settlement resolves allegations originally brought in a lawsuit filed by Steven Peters and Douglas Gray, former Abbott employees, under the qui tam provision of the False Claims Act , which allows whistleblowers to file suit on behalf of the United States for false claims and share in any recovery   As part of today’s resolution, Peters and Gray will receive a total payment of more than $1 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 Attorney General Eric Holder and Health and Human Services Secretary 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 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.

This settlement was the result of an investigation by the Justice Department’s Civil Division, the U.S. Attorney’s Offices for the Eastern District of Tennessee and the Northern District of California and the Office of Inspector General at the U.S. Department of Health and Human Services.

The lawsuit is captioned United States ex rel. Peters et al. v. Abbott Laboratories, Inc., Civil Action No. 3:09-CV-430 (E.D. Tenn.).   The claims settled by this agreement are allegations only, and there has been no determination of liability.

NORTHROP GRUMMAN CORP. PAID $11.4 MILLION TO RESOLVE ALLEGATIONS OF IMPROPER CHARGES ON GOVERNMENT CONTRACTS

FROM:   U.S. JUSTICE DEPARTMENT 
Monday, December 9, 2013
Northrop Grumman Corp. Pays $11.4 Million to Resolve Allegations That It Improperly Charged Costs to Government Contracts

The Justice Department announced today that Northrop Grumman Corp. has paid the United States $11.4 million to settle a government claim for penalties provided under the Federal Acquisition Regulation (FAR)  and False Claims Act allegations stemming from its failure to abide by a 2002 settlement agreement with the Defense Contract Management Agency (DCMA).  The government alleged that Northrop charged to its federal contracts certain costs for deferred compensation awards to key employees, even though it had promised not to do so as part of the earlier 2002 settlement.

“Federal contractors must abide by the obligations they accept when contracting with the government, including compliance with federal regulations restricting the types and amount of costs they can charge to their federal contracts,” said Assistant Attorney General for the Department of Justice’s Civil Division Stuart F. Delery.  “The Department of Justice is committed to enforcing these fundamental obligations using every available tool, including FAR penalties assessed under the contract and, where appropriate, fraud-based counterclaims.”    

Northrop had agreed in its 2002 settlement with DCMA that it would limit the amount of deferred compensation it would include in proposals for subsequent contracts.  The government’s contracting officer found that Northrop had failed to honor this commitment and should be assessed a penalty equal to twice the amount of the unallowable costs claimed.  Northrop challenged the decision in a complaint filed in the U.S. Court of Federal Claims in Washington, D.C.  The Department of Justice responded to the suit with counterclaims alleging that in addition to the FAR penalties, Northrop also had violated the False Claims Act by passing along these unallowable costs to the government in indirect rates applicable to hundreds of 2004 contracts with the government.  The government alleged that as a consequence of Northrop’s knowing misrepresentations, it was induced to pay more than $1.9 million in unallowable costs in thousands of vouchers and invoices.

The settlement was the result of a consolidated effort spearheaded by the Civil Division’s Commercial Litigation Branch in conjunction with the DCMA and the Defense Contract Audit Agency, Western Region Investigative Support Division.  The claims settled by this agreement are allegations only, and there has been no determination of liability.  The case is captioned Northrop Grumman Corporation v. United States, Fed. Cl. No. 07-482C.

AG HOLDER'S REMARKS AT CIVIL DIVISION AWARDS CEREMONY

FROM:  U.S. JUSTICE DEPARTMENT 
Attorney General Eric Holder Delivers Remarks at the Civil Division Awards Ceremony
~ Wednesday, December 4, 2013

Thank you, Stuart [Delery], for those kind words, and for your exceptional leadership as Assistant Attorney General for the Civil Division.  It’s a pleasure to share the stage with you today – as we come together to recognize so many dedicated colleagues; as we call attention to the progress that each of them has made possible; and as we thank them for their tireless work over the past year: in support of this Department, in pursuit of justice, and in service of the American people.

It’s a great privilege to join you in congratulating our 2013 Civil Division award recipients.  And it’s an honor to help welcome all of the proud family members, friends, and distinguished guests who have taken the time to be here in the Great Hall, and whose support – and sacrifices – have been essential to everything that our awardees have accomplished.  Make no mistake: every one of you shares in the recognitions that we are about to bestow.

From the robust enforcement of federal consumer protection laws, to record-setting recoveries under the False Claims Act, this year’s award recipients have secured billions of precious taxpayer dollars through affirmative litigation.  By enforcing regulations to ensure the safety of medicines and food products – and by administering essential public health programs – you have helped to protect the American people.  By taking on numerous cases concerning sensitive matters related to national security, you’ve fought to keep our nation both safe and strong.  And you’ve done it all in a time of unprecedented budgetary difficulties – while contending with the unnecessary cuts imposed by sequestration, and even the personal hardships brought on by a government shutdown.

Despite these obstacles, the award recipients before me – and your colleagues throughout the Civil Division – have achieved extraordinary results.  You’ve made your country, your Department – and this Attorney General – proud.  And you have risen to the most pressing challenges of our time, confronting some of the most significant and complex legal issues this Department has faced.

Many of your successes have been covered extensively by the press.  Others have received less public fanfare, but are no less critical to the operations of the federal government or the well-being of your fellow citizens.  From the attorneys and contractors who sift through endless document, record, and data collections in search of crucial evidence; to the paralegals and other support staff members who work late into the night to assist in emergency filings; to the technology experts who address daily concerns and keep this Division working smoothly – every part of this team is essential to its overall mission.  And every one of your contributions exemplifies the most rigorous standards of professionalism, reflects the highest integrity – and embodies the very best of what it means to be a public servant.

Of course, I recognize that this hasn’t been easy.  And I know you’ve been called upon, on many occasions, to spend long hours in the office, sacrificing time with family and friends in order to advance the critical work with which the American people have entrusted us.  So I want you to know how much President Obama and I value your extraordinary work ethic, your surpassing commitment to the mission we share, and your collective dedication to the ideals that have always defined the Department of Justice.  I consider it a tremendous honor to count each of you as a colleague – and to serve alongside you as we strive, in every case and circumstance, to fight for the interests of the United States – and to see that justice is done.

Before we begin our formal awards presentations, I’d like to take a moment to congratulate Frankie Free on receiving this year’s Stanley Rose Memorial Award, in recognition of his distinguished service to our country over the last 23 years.  Thank you, Frankie, for all that you do.

I’d also like to recognize Robert Kirshman and Mary Mason, the recipients of this year’s Michael Hertz Memorial Award, for their outstanding work.  Like many of you, I had the privilege of working with Mike Hertz during his nearly four-decade-long career here at the Department.  And although we lost him last year – far too soon – I am deeply gratified to know that the spirit of excellence that defined his work will live on not only in the award that bears his name, but in the efforts of all who continue the tradition of service he established.

It’s clear, as we come together today, that your work has in some ways never been more challenging. But it’s also never been more important.  That’s why, as we pause to reflect upon your successes – and to celebrate the achievements of the award recipients who have gone above and beyond the call of duty – we also must recommit ourselves to carrying this work into the future.  We must resolve to keep building on the momentum that each of you has set in motion.  And we must never stop reaching for, and working toward, the better and brighter future that all of our citizens deserve – a future founded on the enduring promise of equal justice for all.

I congratulate you, once again, on these prestigious and well-deserved awards.  I thank you for everything that you do.  And I urge you to keep up the great work.

FLORIDA HOSPICE WILL PAY $3 MILLION TO RESOLVE ALLEGATIONS FALSE CLAIMS ALLEGATIONS

FROM:  U.S. JUSTICE DEPARTMENT 
Tuesday, November 5, 2013

Orlando, Fla., Area Hospice to Pay $3 Million to Resolve Allegations That It Billed Medicare for Patients Not Terminally Ill

Hospice of the Comforter Inc. (HOTCI) has agreed to pay $3 million to resolve allegations that it violated the False Claims Act by submitting false claims to the Medicare program for hospice services provided to patients who were not eligible for the Medicare hospice benefit, the Justice Department announced today.  HOTCI is headquartered in Altamonte Springs, Fla., and provides hospice services to patients residing in Seminole, Osceola and Orange counties in Florida.

“This settlement is a result of the Justice Department’s continuing efforts to prevent the abuse of the taxpayer-funded Medicare hospice program, which is intended to provide comfort and care to terminally ill persons during the last six months of their lives,” said Assistant Attorney General for the Civil Division Stuart F. Delery.  “We will pursue those who seek to misuse this important benefit for their own enrichment.”

The government alleged that between December 2005 and December 2010, HOTCI engaged in practices that resulted in billing Medicare for patients who were not terminally ill.  Specifically, HOTCI allegedly directed its staff to admit all referred patients without regard to whether they were eligible for the Medicare hospice benefit, falsified medical records to make it appear that certain patients were eligible for the benefit when they were not, employed field nurses without hospice training, established procedures to limit physicians’ roles in assessing patients’ terminal status and delayed discharging patients when they became ineligible for the benefit.

As part of this settlement, HOTCI has agreed to enter into a Corporate Integrity Agreement with the Inspector General of the Department of Health and Human Services that provides for procedures and reviews to be put in place to promptly detect and prevent future conduct similar to that which gave rise to the settlement.  In addition, HOTCI’s former Chief Executive Officer Robert Wilson has agreed to a three-year, voluntary exclusion from Medicare, Medicaid and other federal health care programs.

“This settlement represents a fair and appropriate resolution of this troubling matter,” said Acting U.S. Attorney for the Middle District of Florida A. Lee Bentley III.  “Hospice providers in our district should be on notice that our office will do what it takes to protect our citizens from this kind of misconduct.”

“Hospice care is a sacred trust from which no provider should fraudulently profit,” said Inspector General of the U.S. Department of Health and Human Services Daniel R. Levinson.  “Claiming tax dollars for people who are not terminally ill ?? and therefore ineligible for hospice care ?? cannot be tolerated.”

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 Health and Human Services Secretary 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 $16.7 billion through False Claims Act cases, with more than $11.9 billion of that amount recovered in cases involving fraud against federal health care programs.

The allegations settled today arose from a lawsuit filed by a former HOTCI employee, Douglas Stone, 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.  Stone’s share of the recovery has not been determined.

This matter was handled by the Justice Department’s Civil Division, Commercial Litigation Branch; the U.S. Attorney’s Office for the Middle District of Florida and the Department of Health and Human Services Office of the Inspector General.

The case is United States ex rel. Stone v. Hospice of the Comforter Inc ., No. 6:11-cv-1498-ORL-22-DAB (M.D. Fla.).  The claims settled by this agreement are allegations only; there has been no determination of liability.

JOHNSON & JOHNSON TO PAY OVER $2.2 BILLION TO RESOLVE ALLEGATIONS RELATED TO DOCTOR KICKBACK SCHEME

FROM:  U.S. JUSTICE DEPARTMENT 
Monday, November 4, 2013
Johnson & Johnson to Pay More Than $2.2 Billion to Resolve Criminal and Civil Investigations
Allegations Include Off-label Marketing and Kickbacks to Doctors and Pharmacists

WASHINGTON - Global health care giant Johnson & Johnson (J&J) and its subsidiaries will pay more than $2.2 billion to resolve criminal and civil liability arising from allegations relating to the prescription drugs Risperdal, Invega and Natrecor, including promotion for uses not approved as safe and effective by the Food and Drug Administration (FDA) and payment of kickbacks to physicians and to the nation’s largest long-term care pharmacy provider.  The global resolution is one of the largest health care fraud settlements in U.S. history, including criminal fines and forfeiture totaling $485 million and civil settlements with the federal government and states totaling $1.72 billion.


“The conduct at issue in this case jeopardized the health and safety of patients and damaged the public trust,” said Attorney General Eric Holder.  “This multibillion-dollar resolution demonstrates the Justice Department’s firm commitment to preventing and combating all forms of health care fraud.  And it proves our determination to hold accountable any corporation that breaks the law and enriches its bottom line at the expense of the American people.”


The resolution includes criminal fines and forfeiture for violations of the law and civil settlements based on the False Claims Act arising out of multiple investigations of the company and its subsidiaries.


“When companies put profit over patients’ health and misuse taxpayer dollars, we demand accountability,” said Associate Attorney General Tony West.  “In addition to significant monetary sanctions, we will ensure that non-monetary measures are in place to facilitate change in corporate behavior and help ensure the playing field is level for all market participants.”


In addition to imposing substantial monetary sanctions, the resolution will subject J&J to stringent requirements under a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General (HHS-OIG).  This agreement is designed to increase accountability and transparency and prevent future fraud and abuse.


“As patients and consumers, we have a right to rely upon the claims drug companies make about their products,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “And, as taxpayers, we have a right to ensure that federal health care dollars are spent appropriately.  That is why this Administration has continued to pursue aggressively – with all of our available law enforcement tools -- those companies that corrupt our health care system.”


J&J Subsidiary Janssen Pleads Guilty to Misbranding Antipsychotic Drug


In a criminal information filed today in the Eastern District of Pennsylvania, the government charged that, from March 3, 2002, through Dec. 31, 2003, Janssen Pharmaceuticals Inc., a J&J subsidiary, introduced the antipsychotic drug Risperdal into interstate commerce for an unapproved use, rendering the product misbranded.  For most of this time period, Risperdal was approved only to treat schizophrenia.  The information alleges that Janssen’s sales representatives promoted Risperdal to physicians and other prescribers who treated elderly dementia patients by urging the prescribers to use Risperdal to treat symptoms such as anxiety, agitation, depression, hostility and confusion.  The information alleges that the company created written sales aids for use by Janssen’s ElderCare sales force that emphasized symptoms and minimized any mention of the FDA-approved use, treatment of schizophrenia.  The company also provided incentives for off-label promotion and intended use by basing sales representatives’ bonuses on total sales of Risperdal in their sales areas, not just sales for FDA-approved uses.


In a plea agreement resolving these charges, Janssen admitted that it promoted Risperdal to health care providers for treatment of psychotic symptoms and associated behavioral disturbances exhibited by elderly, non-schizophrenic dementia patients.  Under the terms of the plea agreement, Janssen will pay a total of $400 million, including a criminal fine of $334 million and forfeiture of $66 million.  Janssen’s guilty plea will not be final until accepted by the U.S. District Court.

The Federal Food, Drug, and Cosmetic Act (FDCA) protects the health and safety of the public by ensuring, among other things, that drugs intended for use in humans are safe and effective for their intended uses and that the labeling of such drugs bear true, complete and accurate information.  Under the FDCA, a pharmaceutical company must specify the intended uses of a drug in its new drug application to the FDA.  Before approval, the FDA must determine that the drug is safe and effective for those specified uses.  Once the drug is approved, if the company intends a different use and then introduces the drug into interstate commerce for that new, unapproved use, the drug becomes misbranded.  The unapproved use is also known as an “off-label” use because it is not included in the drug’s FDA-approved labeling.

“When pharmaceutical companies interfere with the FDA’s mission of ensuring that drugs are safe and effective for the American public, they undermine the doctor-patient relationship and put the health and safety of patients at risk,” said Director of the FDA’s Office of Criminal Investigations John Roth.  “Today’s settlement demonstrates the government’s continued focus on pharmaceutical companies that put profits ahead of the public’s health.  The FDA will continue to devote resources to criminal investigations targeting pharmaceutical companies that disregard the drug approval process and recklessly promote drugs for uses that have not been proven to be safe and effective.”

J&J and Janssen Settle Civil Allegations of Targeting Vulnerable Patients  with the Drugs Risperdal and Invega for Off-Label Uses

In a related civil complaint filed today in the Eastern District of Pennsylvania, the United States alleges that Janssen marketed Risperdal to control the behaviors and conduct of the nation’s most vulnerable patients: elderly nursing home residents, children and individuals with mental disabilities.  The government alleges that J&J and Janssen caused false claims to be submitted to federal health care programs by promoting Risperdal for off-label uses that federal health care programs did not cover, making false and misleading statements about the safety and efficacy of Risperdal and paying kickbacks to physicians to prescribe Risperdal.

“J&J’s promotion of Risperdal for unapproved uses threatened the most vulnerable populations of our society – children, the elderly and those with developmental disabilities,” said U.S. Attorney for the Eastern District of Pennsylvania Zane Memeger.  “This historic settlement sends the message that drug manufacturers who place profits over patient care will face severe criminal and civil penalties.”

In its complaint, the government alleges that the FDA repeatedly advised Janssen that marketing Risperdal as safe and effective for the elderly would be “misleading.”  The FDA cautioned Janssen that behavioral disturbances in elderly dementia patients were not necessarily manifestations of psychotic disorders and might even be “appropriate responses to the deplorable conditions under which some demented patients are housed, thus raising an ethical question regarding the use of an antipsychotic medication for inappropriate behavioral control.”

The complaint further alleges that J&J and Janssen were aware that Risperdal posed serious health risks for the elderly, including an increased risk of strokes, but that the companies downplayed these risks.  For example, when a J&J study of Risperdal showed a significant risk of strokes and other adverse events in elderly dementia patients, the complaint alleges that Janssen combined the study data with other studies to make it appear that there was a lower overall risk of adverse events.  A year after J&J had received the results of a second study confirming the increased safety risk for elderly patients taking Risperdal, but had not published the data, one physician who worked on the study cautioned Janssen that “[a]t this point, so long after [the study] has been completed … we must be concerned that this gives the strong appearance that Janssen is purposely withholding the findings.”

The complaint also alleges that Janssen knew that patients taking Risperdal had an increased risk of developing diabetes, but nonetheless promoted Risperdal as “uncompromised by safety concerns (does not cause diabetes).”  When Janssen received the initial results of studies indicating that Risperdal posed the same diabetes risk as other antipsychotics, the complaint alleges that the company retained outside consultants to re-analyze the study results and ultimately published articles stating that Risperdal was actually associated with a lower risk of developing diabetes.

The complaint alleges that, despite the FDA warnings and increased health risks, from 1999 through 2005, Janssen aggressively marketed Risperdal to control behavioral disturbances in dementia patients through an “ElderCare sales force” designed to target nursing homes and doctors who treated the elderly.  In business plans, Janssen’s goal was to “[m]aximize and grow RISPERDAL’s market leadership in geriatrics and long term care.”  The company touted Risperdal as having “proven efficacy” and “an excellent safety and tolerability profile” in geriatric patients.

In addition to promoting Risperdal for elderly dementia patients, from 1999 through 2005, Janssen allegedly promoted the antipsychotic drug for use in children and individuals with mental disabilities.  The complaint alleges that J&J and Janssen knew that Risperdal posed certain health risks to children, including the risk of elevated levels of prolactin, a hormone that can stimulate breast development and milk production.  Nonetheless, one of Janssen’s Key Base Business Goals was to grow and protect the drug’s market share with child/adolescent patients.  Janssen instructed its sales representatives to call on child psychiatrists, as well as mental health facilities that primarily treated children, and to market Risperdal as safe and effective for symptoms of various childhood disorders, such as attention deficit hyperactivity disorder, oppositional defiant disorder, obsessive-compulsive disorder and autism.  Until late 2006, Risperdal was not approved for use in children for any purpose, and the FDA repeatedly warned the company against promoting it for use in children.

The government’s complaint also contains allegations that Janssen paid speaker fees to doctors to influence them to write prescriptions for Risperdal.  Sales representatives allegedly told these doctors that if they wanted to receive payments for speaking, they needed to increase their Risperdal prescriptions.

In addition to allegations relating to Risperdal, today’s settlement also resolves allegations relating to Invega, a newer antipsychotic drug also sold by Janssen.  Although Invega was approved only for the treatment of schizophrenia and schizoaffective disorder, the government alleges that, from 2006 through 2009, J&J and Janssen marketed the drug for off-label indications and made false and misleading statements about its safety and efficacy.

As part of the global resolution, J&J and Janssen have agreed to pay a total of $1.391 billion to resolve the false claims allegedly resulting from their off-label marketing and kickbacks for Risperdal and Invega.  This total includes $1.273 billion to be paid as part of the resolution announced today, as well as $118 million that J&J and Janssen paid to the state of Texas in March 2012 to resolve similar allegations relating to Risperdal.  Because Medicaid is a joint federal-state program, J&J’s conduct caused losses to both the federal and state governments.  The additional payment made by J&J as part of today’s settlement will be shared between the federal and state governments, with the federal government recovering $749 million, and the states recovering $524 million.  The federal government and Texas each received $59 million from the Texas settlement.

Kickbacks to Nursing Home Pharmacies

The civil settlement also resolves allegations that, in furtherance of their efforts to target elderly dementia patients in nursing homes, J&J and Janssen paid kickbacks to Omnicare Inc., the nation’s largest pharmacy specializing in dispensing drugs to nursing home patients.  In a complaint filed in the District of Massachusetts in January 2010, the United States alleged that J&J paid millions of dollars in kickbacks to Omnicare under the guise of market share rebate payments, data-purchase agreements, “grants” and “educational funding.”  These kickbacks were intended to induce Omnicare and its hundreds of consultant pharmacists to engage in “active intervention programs” to promote the use of Risperdal and other J&J drugs in nursing homes.  Omnicare’s consultant pharmacists regularly reviewed nursing home patients’ medical charts and made recommendations to physicians on what drugs should be prescribed for those patients.  Although consultant pharmacists purported to provide “independent” recommendations based on their clinical judgment, J&J viewed the pharmacists as an “extension of [J&J’s] sales force.”

J&J and Janssen have agreed to pay $149 million to resolve the government’s contention that these kickbacks caused Omnicare to submit false claims to federal health care programs.  The federal share of this settlement is $132 million, and the five participating states’ total share is $17 million.  In 2009, Omnicare paid $98 million to resolve its civil liability for claims that it accepted kickbacks from J&J and Janssen, along with certain other conduct.

“Consultant pharmacists can play an important role in protecting nursing home residents from the use of antipsychotic drugs as chemical restraints,” said U.S. Attorney for the District of Massachusetts Carmen Ortiz.  “This settlement is a reminder that the recommendations of consultant pharmacists should be based on their independent clinical judgment and should not be the product of money paid by drug companies.”

Off-Label Promotion of the Heart Failure Drug Natrecor

The civil settlement announced today also resolves allegations that J&J and another of its subsidiaries, Scios Inc., caused false and fraudulent claims to be submitted to federal health care programs for the heart failure drug Natrecor.  In August 2001, the FDA approved Natrecor to treat patients with acutely decompensated congestive heart failure who have shortness of breath at rest or with minimal activity.  This approval was based on a study involving hospitalized patients experiencing severe heart failure who received infusions of Natrecor over an average 36-hour period.

In a civil complaint filed in 2009 in the Northern District of California, the government alleged that, shortly after Natrecor was approved, Scios launched an aggressive campaign to market the drug for scheduled, serial outpatient infusions for patients with less severe heart failure – a use not included in the FDA-approved label and not covered by federal health care programs.  These infusions generally involved visits to an outpatient clinic or doctor’s office for four- to six-hour infusions one or two times per week for several weeks or months.

The government’s complaint alleged that Scios had no sound scientific evidence supporting the medical necessity of these outpatient infusions and misleadingly used a small pilot study to encourage the serial outpatient use of the drug.  Among other things, Scios sponsored an extensive speaker program through which doctors were paid to tout the purported benefits of serial outpatient use of Natrecor.  Scios also urged doctors and hospitals to set up outpatient clinics specifically to administer the serial outpatient infusions, in some cases providing funds to defray the costs of setting up the clinics, and supplied providers with extensive resources and support for billing Medicare for the outpatient infusions.

As part of today’s resolution, J&J and Scios have agreed to pay the federal government $184 million to resolve their civil liability for the alleged false claims to federal health care programs resulting from their off-label marketing of Natrecor.  In October 2011, Scios pleaded guilty to a misdemeanor FDCA violation and paid a criminal fine of $85 million for introducing Natrecor into interstate commerce for an off-label use.

“This case is an example of a drug company encouraging doctors to use a drug in a way that was unsupported by valid scientific evidence,” said First Assistant U.S. Attorney for the Northern District of California Brian Stretch.  “We are committed to ensuring that federal health care programs do not pay for such inappropriate uses, and that pharmaceutical companies market their drugs only for uses that have been proven safe and effective.”

Non-Monetary Provisions of the Global Resolution and Corporate Integrity Agreement

In addition to the criminal and civil resolutions, J&J has executed a five-year Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General (HHS-OIG).  The CIA includes provisions requiring J&J to implement major changes to the way its pharmaceutical affiliates do business.  Among other things, the CIA requires J&J to change its executive compensation program to permit the company to recoup annual bonuses and other long-term incentives from covered executives if they, or their subordinates, engage in significant misconduct.  J&J may recoup monies from executives who are current employees and from those who have left the company.  The CIA also requires J&J’s pharmaceutical businesses to implement and maintain transparency regarding their research practices, publication policies and payments to physicians.  On an annual basis, management employees, including senior executives and certain members of J&J’s independent board of directors, must certify compliance with provisions of the CIA.  J&J must submit detailed annual reports to HHS-OIG about its compliance program and its business operations.

“OIG will work aggressively with our law enforcement partners to hold companies accountable for marketing and promotion that violate laws intended to protect the public,” said Inspector General of the U.S. Department of Health and Human Services Daniel R. Levinson.  "Our compliance agreement with Johnson & Johnson increases individual accountability for board members, sales representatives, company executives and management.  The agreement also contains strong monitoring and reporting provisions to help ensure that the public is protected from future unlawful and potentially harmful off-label marketing."

Coordinated Investigative Effort Spans Federal and State Law Enforcement

This resolution marks the culmination of an extensive, coordinated investigation by federal and state law enforcement partners that is the hallmark of the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which fosters government collaborations to fight fraud.  Announced in May 2009 by Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius, the HEAT initiative has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.

The criminal cases against Janssen and Scios were handled by the U.S. Attorney’s Offices for the Eastern District of Pennsylvania and the Northern District of California and the Civil Division’s Consumer Protection Branch.  The civil settlements were handled by the U.S. Attorney’s Offices for the Eastern District of Pennsylvania, the Northern District of California and the District of Massachusetts and the Civil Division’s Commercial Litigation Branch.  Assistance was provided by the HHS Office of Counsel to the Inspector General, Office of the General Counsel-CMS Division, the FDA’s Office of Chief Counsel and the National Association of Medicaid Fraud Control Units.

This matter was investigated by HHS-OIG, the Department of Defense’s Defense Criminal Investigative Service, the FDA’s Office of Criminal Investigations, the Office of Personnel Management’s Office of Inspector General, the Department of Veterans Affairs, the Department of Labor, TRICARE Program Integrity, the U.S. Postal Inspection Service’s Office of the Inspector General and the FBI.

One of the most powerful tools in the fight against Medicare and Medicaid financial fraud is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $16.7 billion through False Claims Act cases, with more than $11.9 billion of that amount recovered in cases involving fraud against federal health care programs.

The department enforces the FDCA by prosecuting those who illegally distribute unapproved, misbranded and adulterated drugs and medical devices in violation of the Act.  Since 2009, fines, penalties and forfeitures that have been imposed in connection with such FDCA violations have totaled more than $6 billion.

The civil settlements described above resolve multiple lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the government and to share in any recovery.  From the federal government’s share of the civil settlements announced today, the whistleblowers in the Eastern District of Pennsylvania will receive $112 million, the whistleblowers in the District of Massachusetts will receive $27.7 million and the whistleblower in the Northern District of California will receive $28 million.  Except to the extent that J&J subsidiaries have pleaded guilty or agreed to plead guilty to the criminal charges discussed above, the claims settled by the civil settlements are allegations only, and there has been no determination of liability.

DIALYSIS COMPANY TO PAY $7.3 MILLION TO RESOLVE ALLEGATIONS IT SUBMITTED FALSE CLAIMS TO MEDICARE

FROM: U.S. DEPARTMENT OF JUSTICE
Tuesday, May 21, 2013

U.S. Renal Care to Pay $7.3 Million to Resolve False Claims Act Allegations

Allegedly Submitted False Medicare Claims for Drug Provided to Dialysis Patients

U.S. Renal Care, headquartered in Plano, Texas, has agreed to pay $7.3 million to resolve allegations that Dialysis Corporation of America (DCA) violated the False Claims Act by submitting false claims to the Medicare program for more Epogen than was actually administered to dialysis patients at DCA facilities, the Justice Department announced today. U.S. Renal Care, which acquired DCA in June 2010, owns and operates more than 100 freestanding outpatient dialysis facilities throughout the United States.

Epogen is an intravenous medication that is used to treat anemia, a common condition afflicting patients with end-stage renal disease. Epogen vials contain a small amount of medication in excess of the labeled amount, known as "overfill," to compensate for medication that may remain in the vial after extraction and in the syringe upon administration. The United States contends that from January 2004 through May 2011, DCA billed for 10-11% overfill whenever it administered Epogen. However, because of the types of syringes DCA used, the United States alleges that DCA was not able to withdraw and administer 10-11% overfill every time it administered Epogen to patients, and thus submitted false claims to Medicare that overstated the amount of Epogen that it was actually providing.

"Today’s settlement shows that the Justice Department will aggressively pursue those health care providers who cut corners at the expense of the American taxpayers, such as by billing for items and services that were not provided," said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division. "We will continue to protect scarce Medicare dollars."

"Medical care providers who submit false claims for services and products that were not actually delivered threaten the financial viability of the Medicare Trust Fund," said Rod J. Rosenstein, U.S. Attorney for the District of Maryland.

"Health providers billing for phantom services cheat taxpayers, cheat programs straining to pay for vitally needed care, and cheat patients who pay inflated copayments," said Nick DiGiulio, Special Agent in Charge, Office of Inspector General, U.S. Department of Health and Human Services for the region including Maryland. "We will continue to work with the Department of Justice to ensure health professionals get reimbursed only for services they actually provide"

This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. 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 that effort is the False Claims Act, which the Justice Department has used to recover $10.2 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $14.2 billion.

The allegations settled today arose from a lawsuit filed by Laura Davis against DCA under the qui tam, or whistleblower, provisions of the False Claims Act. The Act allows private citizens with knowledge of fraud to bring civil actions on behalf of the United States and share in any recovery. Ms. Davis will receive $1,314,000 as part of today’s settlement.

This case was handled by the Civil Division of the Department of Justice and the U.S. Attorney’s Office for the District of Maryland with assistance from the Office of Inspector General for the Department of Health and Human Services. The claims settled by this agreement are allegations only, and there has been no determination of liability. The whistleblower suit is captioned United States ex rel. Laura Davis v.

COMPANY BASED IN JAPAN SETTLES FALSE CLAIMS ALLEGATIONS FOR $45 MILLION

 

FROM: U.S. DEPARTMENT OF JUSTICE

Monday, December 17, 2012
Japanese-Based Toyo Ink and Affiliates in New Jersey and Illinois Settle False Claims Allegation for $45 Million

United States Alleges Companies Knowingly Evaded Import Duties

Japan-based Toyo Ink SC Holdings Co. Ltd. and various affiliated entities (collectively, Toyo Ink) have agreed to pay $45 million, plus interest, to settle allegations that they violated the False Claims Act by knowingly failing to pay antidumping and countervailing duties, the Justice Department announced today.

Toyo Ink, which has operations worldwide, is a leading provider of printing inks. The Toyo Ink parties to the agreement are the Japanese companies Toyo Ink SC Holdings Co. Ltd. (successor in interest to Toyo Ink Manufacturing Co. Ltd.), Toyocolor Co. Ltd., Toyo Ink Co. Ltd. and Toyochem Co. Ltd., and their United States affiliates Toyo Ink Mfg. America LLC (located in New Jersey), Toyo Ink International Corp. (located in New Jersey), and Toyo Ink America LLC (located in Illinois).

The Department of Commerce assesses antidumping and countervailing duties to protect United States businesses by offsetting unfair foreign pricing and government subsidies. The duties are collected by U.S. Customs, which is an agency of the Department of Homeland Security. Import duties may vary depending on a product’s country of origin, which is identified by determining the last country in which the product underwent a substantial transformation. The government alleged that Toyo Ink knowingly misrepresented, or caused to be misrepresented, the country of origin on documents presented to U.S. Customs and Border Protection to avoid paying duties, particularly antidumping and countervailing duties, on imports of the colorant carbazole violet pigment number 23 (CVP-23) between April 2002 and March 2010.

Specifically, the government alleged that Toyo Ink misrepresented Japan and Mexico as the countries of origin for its CVP-23 imports, rather than the People’s Republic of China (PRC) and India which were the company’s sources for raw CVP-23. Imports of CVP-23 from the PRC and India have been subject to these duties since 2004; there are no such duties on imports from Japan or Mexico. Although Toyo Ink’s CVP-23 from the PRC and India underwent a finishing process in Japan and Mexico before it was imported into the United States, the government alleged that this process was insufficient to constitute a substantial transformation to render these countries as the countries of origin.

"Importers seeking access to United States markets must comply with the law, including the payment of customs duties meant to protect domestic companies from unfair competition abroad," said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division. "This settlement demonstrates that the Department of Justice will zealously guard the public fisc – taking action not only against those who fraudulently obtain government funds, but also against those who inappropriately avoid paying money owed to the United States."

Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina, stated that, "Fair and lawful trade requires importers to truthfully identify their products and pay the appropriate duties. Our office will vigorously investigate and prosecute importers who make false representations and claims designed to avoid the payment of lawful import duties."

The allegations resolved by today’s settlement were initially alleged in a whistleblower lawsuit filed under the False Claims Act by John Dickson, president of a domestic producer of CVP-23. Under the False Claims Act, private citizens can sue on behalf of the United States and share in any recovery. Mr. Dickson will receive more than $7,875,000 as his share of the government’s recovery.

The investigation was handled by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Western District of North Carolina, the Department of Homeland Security’s U.S. Customs and Border Protection and the Department of Commerce’s International Trade Administration. The claims settled by this agreement are allegations only; there has been no determination of liability.

The False Claims Act suit was filed in the U.S. District Court for the Western District of North Carolina, and is captioned United States ex rel. Dickson v. Toyo Ink Manufacturing Co., Ltd., et al., No. 09-CV-438 (W.D.N.C.).

$30 MILLION PAID TO SETTLE FALSE CLAIMS ACT ALLEGATIONS BY MEDICAL COMPANY

Photo From U.S. Department Of Defense.

FROM: U.S. DEPARTMENT OF JUSTICE

Friday, November 2, 2012
Orthofix Subsidiary, Blackstone Medical, Pays U.S. $30 Million to Settle False Claims Act Allegations
Allegedly Paid Kickbacks to Doctors to Induce Use of Company’s Products

Orthofix International NV, has agreed to pay the United States $30 million to settle allegations that an Orthofix subsidiary, Blackstone Medical Inc., paid illegal kickbacks to physicians in order to induce use of the company’s products, the Justice Department announced today. Orthofix, which manufactures spinal implants and other spinal surgery products, is a publicly traded company headquartered in Curacao.

The civil settlement resolves allegations that Blackstone paid kickbacks to spinal surgeons. These alleged kickbacks took a number of forms, including sham consulting agreements, sham royalty arrangements, sham research grants, travel and entertainment.

"Kickbacks to physicians are incompatible with a properly functioning health care system," said Stuart F. Delery, the Acting Assistant Attorney General for the Department’s Civil Division. "They can corrupt physicians’ medical judgment and cause misallocation of vital health care resources. Today’s settlement reflects the progress we are making in the ongoing fight against abusive and illegal practices in the healthcare industry."

"This settlement demonstrates the government’s continued resolve to ensure that patients receive, and the government pays for, health care that is based solely on sound medical judgment, not compromised by kickbacks," said Carmen M. Ortiz, U.S. Attorney for the District of Massachusetts. "We believe that this is a just and meaningful resolution that is in the best interests of the citizens of the Commonwealth and taxpayers across the nation."

"To those contemplating taking advantage of Medicare for their own gain, today’s settlement sends a loud, clear message," said Susan Waddell, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General New England region. "Law enforcement will work aggressively to eliminate efforts to abuse vital taxpayer-funded health care programs."

"Our men and women in uniform and their beneficiaries rely on their healthcare providers to perform their jobs without bias and make decisions in the best interest of their patients," said Kathryn Feeney, Resident Agent in Charge for the Defense Criminal Investigative Service, New Haven Resident Agency. "Kickbacks, like those alleged here, undermine the TRICARE Military Health System . A settlement like this helps maintain the integrity of an important program our armed services depend on."

"Blackstone Medical, Inc. now knows the FBI and our law enforcement partners are committed to investigating and uncovering healthcare fraud in all its forms, particularly schemes like the kickbacks Blackstone perpetrated to obtain profits at the expense of taxpayers," said Richard DesLauriers, Special Agent in Charge of the Federal Bureau of Investigation Boston Field Division.

As part of the settlement, Orthofix also agreed to enter into a corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services, which provides for procedures and reviews to be put in place to avoid and promptly detect conduct similar to that alleged in this matter.

The allegations resolved by today’s settlement were initially alleged in a whistleblower suit filed under the False Claims Act, which authorizes private citizens to bring suit on behalf of the government for false claims for government funds, and share in any recovery. The whistleblower in this case, Susan Hutcheson, will receive $8 million as her share of the settlement amount.

This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. 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 that effort is the False Claims Act, which the Justice Department has used to recover $9.5 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $13.2 billion.

The case was handled by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Massachusetts, Office of Inspector General of the Department of Health and Human Services, the FBI and the Defense Criminal Investigative Service of the Department of Defense. The claims settled by this agreement are allegations only, and there has been no determination of liability.

U.S. FILES COMPLAINT AGAINST COMPANY THAT PROVIDED SECURITY GUARDS IN IRAQ

Photo Credit:  U.S. Army.
FROM: U.S. DEPARTMENT OF JUSTICE

Wednesday, October 31, 2012
United States Sues Virginia-based Contractor for False Claims Under Contract for Security in Iraq
Allegedly Billed US for Security Guards Who Did Not Meet Contract Requirements
The United States has filed a complaint against a Virginia-based contractor alleging that the company submitted false claims for unqualified security guards under a contract to provide security in Iraq, the Justice Department announced today. The company, Triple Canopy Inc. is headquartered in Reston, Va.

In June 2009, the Joint Contracting Command in Iraq/Afghanistan (JCC-I/A) awarded Triple Canopy a one-year, $10 million contract to perform a variety of security services at Al Asad Airbase – the second largest air base in Iraq. The multi-national JCC-I/A was established by U.S. Central Command in November 2004, to provide contracting support related to the government’s relief and reconstruction efforts in Iraq.

The government’s complaint alleges that Triple Canopy knowingly billed the United States for hundreds of foreign nationals it hired as security guards who could not meet firearms proficiency tests established by the Army and required under the contract. The tests ensure that security guards hired to protect U.S. and allied personnel are capable of firing their AK-47 assault rifles and other weapons safely and accurately. The government also alleges that Triple Canopy’s managers in Iraq falsified test scorecards as a cover up to induce the government to pay for the unqualified guards, and that Triple Canopy continued to bill the government even after high-level officials at the company’s headquarters had been alerted to the misconduct. The complaint further alleges that Triple Canopy used the false qualification records in an attempt to persuade the JCC-I/A to award the company a second year of security work at the Al Asad Airbase.

"For a government contractor to knowingly provide deficient security services, as is alleged in this case, is unthinkable, especially in war time," said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division of the Department of Justice. "The department will do everything it can to ensure that contractors comply with critical contract requirements and that contractors who don’t comply aren’t permitted to profit at the expense of our men and women in uniform and the taxpayers at home who support them."

"We will not tolerate government contractors anywhere in the world who seek to defraud the United States through deliberate or reckless conduct that violates contractual requirements and risks the security of government personnel," said Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia.

The government’s claims are based on a whistleblower suit initially filed by a former employee of Triple Canopy in 2011. The suit was filed under the qui tam, or whistleblower, provision of the False Claims Act, which allows private persons to file suit on behalf of the United States. Under the act, the government has a period of time to investigate the allegations and decide whether to intervene in the action or to decline intervention and allow the whistleblower to go forward alone.

This matter was investigated by the U.S. Attorney’s Office for the Eastern District of Virginia; the Commercial Litigation Branch of the Justice Department’s Civil Division; and the Army Criminal Investigative Command (CID) and Defense Criminal Investigative Service (DCIS) of the Department of Defense.

The claims asserted against Triple Canopy are allegations only; there has been no determination of liability. The government is not aware of any injuries that occurred as a result of the alleged misconduct.

COLARADO BASED U.S. GOVERNEMENT CONTRACTOR ALLEGEDLY ENGAGED IN TIME CARD FRAUD

FROM: U.S. DEPARTMENT OF JUSTICE

Friday, September 28, 2012
U.S. Government Intervenes in False Claims Suit Against CH2M Hill Hanford Group

Colorado-based Company Allegedly Engaged in Widespread Time Card Fraud At Department of Energy Nuclear Site

The government has intervened in a lawsuit against CH2M Hill Hanford Group Inc. (CH2M Hill) in the U.S. District Court for the Eastern District of Washington, the Department of Justice announced today. CH2M Hill is a subsidiary of CH2M Hill Companies Ltd., a Colorado-based engineering and construction services company.

Between 1999 and 2008, CH2M Hill was a U.S. Department of Energy prime contractor responsible for the management and cleanup of over 170 underground storage tanks containing mixed radioactive and hazardous waste at the Department of Energy’s Hanford Nuclear Site in southeastern Washington. The lawsuit filed by Mr. Schroeder alleges that numerous CH2M Hill hourly employees regularly and substantially overstated the number of hours that they worked. The complaint also alleges that CH2M Hill management knowingly condoned this practice and submitted inflated claims to the Department of Energy that included the fraudulently claimed hours.

Eight former CH2M Hill employees, including Mr. Schroeder, have pleaded guilty to felony charges stemming from the time card fraud. The lawsuit was originally filed under the False Claims Act by Carl Schroeder, a former employee of CH2M Hill.

The False Claims Act authorizes private parties to sue on behalf of the United States and authorizes the United States to intervene in such a suit and take over responsibility for litigating it. Although the act generally authorizes the whistleblower who initiated the suit to share in any recovery, it also bars recovery by any whistleblower who is convicted of criminal conduct for his role in the fraud/ The United States has notified the court that it expects to file a motion to dismiss Mr. Schroeder from the action on the basis of is criminal conduct. Mr. Schroder’s lawsuit is captioned U.S. ex rel. Schroeder v. CH2M Hill, 09-cv-5038.

The claims asserted in this case are allegations only, and there has been no determination of liability. The case is being handled by the Civil Division of the Department of Justice and the U.S. Attorney’s Office for the Eastern District of Washington, with the assistance of the Department of Energy Office of Inspector General.

SUBSIDIARY OF ALCATEL-LUCENT TO PAY $4.2 MILLION TO SETTLE FALSE CLAIIMS ACT ALLEGATIONS IN IRAQ

Map Credit:  CIA World Factbook.
FROM: U.S. DEPARTMENTOF JUSTICE
Friday, September 21, 2012

Alcatel-lucent Subsidiary Agrees to Pay U.S. $4.2 Million to Settle False Claims Act Allegations

Related to $250 Million Contract for 911 Emergency Response System in Iraq

WASHINGTON – An Alcatel-Lucent subsidiary, Lucent Technologies World Services Inc. (LTWSI), has agreed to pay the United States $4.2 million to settle False Claims Act allegations that it submitted misleading testing certifications to the Army in connection with the design, construction and modernization of Iraq’s emergency communications system, the Department of Justice announced today. Alcatel-Lucent is a global telecommunications provider.

In March 2004, the U.S. Army awarded LTWSI a $250 million contract to build the Advanced First Responder Network (AFRN), a 911 emergency response and first responder communications system designed to enable Iraqis to summon police, fire and medical assistance in emergencies. Today’s settlement resolves allegations that LTWSI submitted claims for payment for equipment, services and contract performance award fees under the AFRN contract based upon inaccurate certifications that LTWSI, between January and July 2005, had performed and successfully completed certain testing of AFRN radio transmission sites, as well as validation of the network as a whole, to ensure the network’s proper operation prior to acceptance by the United States and transfer to the Iraqi government.

"The integrity of our public contracting system is a matter of paramount concern to the Department of Justice, especially where contractors have been engaged to supply critical support for the work of stabilizing Iraq and Afghanistan," said Stuart F. Delery, Acting Assistant Attorney General for the Department of Justice’s Civil Division. "The department will seek to recover losses to the American taxpayer when a contractor has claimed money to which it was not entitled."

"The United States must be able to count upon government contractors to seek payment only for services performed in conformance with their contractual obligations. That is particularly true of contractors performing work for the United States in ‘hot spots’ around the globe where verification of invoiced work can be both difficult and dangerous," said Jenny Durkan, the U.S. Attorney for the Western District of Washington. "LTWSI’s internal procedures on the AFRN project clearly should have been more robust in this instance."

The settlement resolves a whistleblower suit filed under the False Claims Act in December 2008, by Geoffrey Willson, LTWSI's former contract manager for the project. The False Claims Act permits private parties to sue on behalf of the United States for submission of false claims to the government and to share in any recovery. Willson will receive $758,000 as his statutory share of today’s settlement.

This matter was handled jointly by the U.S. Attorney’s Office for the Western District of Washington and the Department of Justice Civil Division’s Commercial Litigation Branch in Washington, D.C. Investigative support was provided by the Department of Defense Inspector General’s Seattle Resident Agency of the Defense Criminal Investigative Service. The Defense Contract Audit Agency and Army Criminal Investigation Command also provided investigative support.

The claims settled by this agreement are allegations only and do not constitute a determination of liability.

U.S. GOVERNMENT JOINS LAWSUIT AGAINST GALLUP FOR VIOLATION OF FALSE CLAIMS ACT

FROM: U.S. DEPARTMENT OF JUSTICE
Wednesday, August 22, 2012

US Government Joins False Claims Act Lawsuit Against the Gallup Organization

Suit Alleges Polling Firm Overcharged Government on Contracts

The United States has joined a whistleblower lawsuit against The Gallup Organization, the Justice Department announced today. The lawsuit was filed by Michael Lindley, a former Gallup employee, who alleges that Gallup violated the False Claims Act by making false claims for payment under contracts with the U.S. Mint, the State Department and other federal agencies to provide polling services for various government programs.

According to the whistleblower’s complaint, Gallup violated the False Claims Act by giving the government inflated estimates of the number of hours that it would take to perform its services, even though it had separate and lower internal estimates of the number of hours that would be required. The complaint further alleges that the government paid Gallup based on the inflated estimates, rather than Gallup’s lower internal estimates. The government intervened in the lawsuit with respect to Gallup’s contracts with the Mint and the State Department.

"Contractors must understand that it is unlawful to use inflated estimates to obtain higher contract prices," said Stuart F. Delery, Acting Assistant Attorney General for the Department’s Civil Division. "The decision to join this civil lawsuit underscores the commitment of the Department of Justice to recover federal funds that are unlawfully claimed."

The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act, wh ich permit private parties to sue on behalf of the United States for submission of false claims to the government. The private plaintiffs are entitled to receive a share of any funds recovered through the lawsuit. The False Claims Act authorizes the United States to intervene in such a lawsuit and take over primary responsibility for litigating it. The False Claims Act allows for recovery of three times the government’s losses, plus civil penalties.

"Contractors who do business with the federal government must honor their obligations to provide honest services and products," said U.S. Attorney Ronald C. Machen Jr. "Working with relators and federal investigators, we will do all that we can to act against those who illegitimately bill the American taxpayers."

In its notice announcing intervention, the United States also indicated that it plans to assert additional claims related to Gallup’s subcontract with the Federal Emergency Management Agency (FEMA). These claims relate to allegations in the whistleblower lawsuit that Gallup negotiated for employment with a FEMA official who was responsible for Gallup’s subcontract while, at the same time, Gallup was seeking to obtain additional funding from FEMA for Gallup’s subcontract.

The lawsuit, which was filed in the District of Columbia, is captioned U.S. ex rel. Lindley v. The Gallup Organization, 09-cv-01985. The claims made in the complaint are only allegati ons and do not constitute a determination of liability.

COMPANY PAYS $4 MILLION TO RESOLVE FALSE CLAIMS ACT VIOLATIONS REGARDING NATURAL GAS PURCHASES

FROM:  U.S. DEPARTMENT OF JUSTICE
Tuesday, July 3, 2012
Louis Dreyfus Energy Services Pays $4 Million to Resolve Allegations That It Violated the False Claims ActConnecticut-based Company Allegedly Failed to Pay Money Owed on Natural Gas Acquired from Government

Louis Dreyfus Energy Services has paid the United States $4,084,000 to settle allegations that it violated the False Claims Act by failing to pay money owed on natural gas acquired from the Department of the Interior, the Justice Department announced today.   Louis Dreyfus, which is based in Connecticut, is an energy company that is involved in merchandising, transportation, trading and storage of natural gas.

The settlement agreement resolves contentions by the United States that from December 2004 to March 2008, Louis Dreyfus Energy Services made false claims or misleading statements to the Department of the Interior involving contracts to buy natural gas produced from federal oil and gas leases in the Gulf of Mexico.   Starting in 2004, Louis Dreyfus agreed to pay the Interior Department for natural gas based on a price associated with the delivery of the gas at a fixed point along a natural gas pipeline. After its contracts with the Interior Department were executed, the company requested and received a discount in the price it would pay the Interior Department for the natural gas obtained under the contracts.   The United States contends that this price discount applied only when there was a complete or near-complete constraint in the natural gas pipeline such that Louis Dreyfus was unable to transport natural gas along the pipeline.   However, the energy services company claimed and obtained the price discounts even on days when it was able to ship natural gas along the pipeline.   Thus, the United States contends that Louis Dreyfus was not entitled to the price discounts that it sought and received from the Department of the Interior.

“Companies that deal with the United States have to live up to their commitments, whether they relate to the use of the nation’s natural resources or to other government programs or benefits,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division.   “The American taxpayers will not tolerate those that claim price discounts from the United States to which they are not entitled.”
“Oil and natural gas companies must understand that using false or misleading claims to get a better price is unfair and unlawful.   For companies that make such claims, there are significant consequences,” said John Walsh, U.S. Attorney for the District of Colorado.  

“This settlement is a message to industry and the public that federal government agencies, working together, are focused on the promise that the American taxpayers will get their fair share of all monies owed from public resources,” said Mary L. Kendall, Acting Inspector General of the Department of the Interior.

“Energy companies have a responsibility to respect the public trust in their efforts to help fuel this nation’s energy needs,” said Paul Mussenden, the Department of the Interior’s Deputy Assistant Secretary for Natural Resources Revenue Management.   “It is imperative they honor that trust and pay the appropriate revenues that are due to American taxpayers for these precious natural resources.”   Mussenden added that “ONRR will remain diligent in its efforts to collect every dollar due to the public and the U.S. Government.”

In addition to resolving the company’s False Claims Act liability, the settlement today also resolves certain administrative claims between the Interior Department’s Office of Natural Resources Revenue and Louis Dreyfus.

The investigation and settlement of this matter were jointly handled by the U.S. Attorney for the District of Colorado, the Justice Department’s Civil Division, the Office of Natural Resources Revenue, the Department of the Interior’s Office of the Solicitor and the Energy Investigations Unit of the Department of the Interior’s Office of Inspector General.   The claims settled by this agreement are allegations only.   There has been no determination of liability.

DEFENSE CONTRACTOR TO PAY OVER $18 MILLION TO RESOLVE FALSE CLAIMS ACT LAWSUIT

FROM:  U.S. DEPARTMENT OF JUSTICE
Friday, June 1, 2012
Virginia-based Defense Contractor Calnet to Pay $18.1 Million to Resolve False Claims Act Lawsuit
Calnet Inc. has agreed to pay the United States $18.1 million to resolve allegations that the company submitted false claims to the Department of Defense, the Justice Department announced today.  Calnet Inc., an intelligence analysis, information technology and language services company, is headquartered in Reston, Virginia.

The settlement with Calnet relates to three contracts under which the company supported the United States? war effort by providing translation and linguist services at Guantanamo Bay and several other facilities beginning in 2005.  Calnet was a subcontractor on one of the contracts, and the prime contractor on the other two contracts.  The United States alleged that Calnet overstated its provisional indirect or overhead rates on each of these contracts and thus submitted inflated claims for payment to the United States.

?Contractors are expected to comply with their statutory obligations and act in good faith when dealing with the United States government,? said Stuart F. Delery, Acting Assistant Attorney General for the Department of Justice?s Civil Division.  ?We will not tolerate false statements and failure to disclose information that is important to the government?s contracting processes.?

?We?re using every tool available to assure the integrity of government contracting,? said U.S. Attorney MacBride. ?This is one of several cases we have pursued to protect against procurement fraud in the Eastern District of Virginia.?

The settlement with Calnet resolves a lawsuit filed in the U.S. District Court for the Eastern District of Virginia under the False Claims Act by former Calnet employee, Kimthy Chao.  Under the False Claims Act, private citizens can bring suit on behalf of the United States and share in any recovery obtained by the government.  Mr. Chao?s share of the Calnet settlement will be $2,669,724.

This settlement was the result of a coordinated effort by the Department of Justice, Civil Division, Commercial Litigation Branch; the U.S. Attorney?s Office for the Eastern District of Virginia; the Defense Criminal Investigative Service and the Defense Contract Audit Agency.  The claims settled by this agreement are allegations only and there has been no determination of liability.

MILITARY FLARE MAKER PAYS NEARLY $37 MILLION TO SETTLE FALSE CLAIMS ACT

FROM:  U.S. JUSTICE DEPARTMENT
Monday, April 23, 2012
Atk Launch Systems Inc. Settles False Claims Product Substitution Case for Nearly $37 Million Allegedly Delivered Unsafe Illuminating Para-flares Under Department of Defense Contracts

ATK Launch Systems Inc. has agreed to a $36,967,160 settlement with the United States to resolve allegations that ATK sold dangerous and defective illumination flares to the Army and the Air Force.   According to the government’s allegations, from 2000 to 2006, ATK delivered LUU-2 and LUU-19 illuminating para-flares to the Defense Department.   These flares, which burn in excess of 3,000 degrees Fahrenheit for over five minutes, are used for nighttime combat, covert and search and rescue operations and have been used extensively by American forces in Iraq and Afghanistan in the global war on terror.  The government alleged that the flares delivered by ATK were incapable of withstanding a 10-foot drop test without exploding or igniting, as required by specifications, and that ATK was aware of this when it submitted claims for payment.

ATK has agreed to pay the United States $21 million in cash and provide necessary in-kind services worth $15,967,160 to fix the 76,000 unsafe para-flares remaining in the government’s inventory.   The settlement resolves a False Claims Act suit filed in the U.S. District Court for the District of Utah.

The lawsuit was initially filed by an ATK employee under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals, called “relators” to bring lawsuits on behalf of the United States and receiv e a portion of the proceeds of a settlement or judgment awarded against a defendant.

“Our men and women in combat deserve equipment that meets critical safety and performance requirements,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division. “This case demonstrates that the Department of Justice will pursue cases where contractors knowingly provide defective equipment that puts the safety of American military service members at risk.”

“This settlement demonstrates our commitment to aggressively go after contractors who recklessly disregard and deliberately ignore critical safety defects in munitions used by America’s uniformed fighting men and women on the front lines of the war on terror,” said David B. Barlow, U.S. Attorney for the District of Utah.  “This office fully supported the federal investigators in their efforts to uncover these fraudulent claims and recover the ill-gotten gains for the American taxpayers.”

The investigation team, which was led by the Defense Criminal Investigative Service, included the Air Force Office of Special Investigation, the Navy Naval Criminal Investigative Service, the Army Criminal Investigative Command and auditors from the Defense Contract Audit Agency and the Defense Contract Management Agency.  Additional technical support was provided by the Army Research Laboratory in Aberdeen, Md., the Army Aviation and Missile Command in Huntsville, Ala., the Naval Sea Systems Command at Crane, Ind. and Portsmouth, R.I., the Defense Standardization Program Office at Fort Belvoir, Va., the Air Force Materiel Command at Wright Patterson Air Force Base, Ohio and Hill Air Force Base, Utah, and the Army Materiel Command at Rock Island Arsenal, Ill.