False Claims Act

Michigan-based healthcare practices Jackson Cardiology Associates (JCA) and Allegiance Health have agreed to pay a total of $4 million to settle allegations that the facilities knowingly submitted or caused the submission of false claims to Medicare, Medicaid, and other federal health programs, the U.S. Department of Justice announced this week.

JCA owner Dr. Jashu Patel and his associates allegedly performed medically inappropriate cardiac procedures, including invasive catheterizations at Allegiance Health.  Specifically, the evidence showed that Dr. Patel ordered catheterizations for patients based on findings from nuclear stress tests that he improperly read as positive.  The government found that three-quarters of these patients had no significant heart blockages.  These catheterizations involve snaking a hollow tube into the heart through an incision in the patient’s groin.

Patel and Jackson Cardiology Associates also allegedly performed a variety of other office-based unnecessary tests and procedures, including peripheral stenting. 

Because the unnecessary procedures were paid for by Medicare or Medicaid, these constituted false claims.

The lawsuit was originally filed by Dr. Julie Kovach, a Michigan cardiologist, under the whistleblower provisions of the False Claims Act.  The False Claims Act allows private citizens with knowledge of fraud against the government to sue on behalf of the government and share in the recovery.  Kovach’s share of the settlement has not been announced.

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.

North Carolina-based TranS1 Inc., now known as Baxano Surgical Inc., has agreed to pay the U.S. government $6 million to resolve allegations that the company knowingly submitted or caused the submission of false claims to Medicare and other federal health programs, the U.S. Department of Justice announced last week.

The government alleged that TranS1 knowingly caused health care providers to submit claims with incorrect diagnosis or procedure codes for minimally-invasive spine fusion surgeries using Trans1’s AxiaLIF System, which was developed as an alternative to invasive spine fusion surgeries.  The government alleged that TranS1 improperly counseled physicians and hospitals to bill for the AxiaLIF System by using incorrect and inaccurate codes intended for more invasive spine fusion surgeries, resulting in health care providers receiving greater reimbursement than they were entitled to.  

The government further alleged that TranS1 knowingly paid illegal remuneration to certain physicians for participating in speaker programs and consultant meetings intended to induce them to use TranS1 products, in violation of the Federal Anti-Kickback Statute, and thereby caused false claims to be submitted to federal health care programs.  The Anti-Kickback Statute prohibits offering or paying remuneration to induce referrals of items or services covered by federally-funded programs and is intended to ensure that a physician’s medical judgments are not compromised by improper financial incentives.

In addition, the United States alleged that TranS1 promoted the sale and use of its AxiaLIF System for uses that were not approved or cleared by the U.S. Food and Drug Administration, including use in certain procedures to treat complex spine deformity, and were thus not covered by federal health care programs.     

As part of the settlement, TranS1 has agreed to enter into a corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services.  That agreement provides for procedures and reviews to be put in place to avoid and promptly detect conduct similar to that which gave rise to this matter.  

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.

Fifty-five hospitals located throughout the United States have agreed to pay the U.S. government over $34 million to settle allegations that the facilities knowingly submitted or caused the submission of false claims to Medicare for kyphoplasty procedures, the U.S. Department of Justice announced this week. 

Kyphoplasty is a minimally-invasive procedure used to treat certain spinal fractures, often related to osteoporosis.  In many cases, kyphoplasty can be performed safely and effectively as an outpatient procedure without any need for a more costly hospital admission.  The agreements announced today resolve allegations that the settling hospitals frequently billed Medicare for kyphoplasty procedures on a more costly inpatient basis, rather than an outpatient basis, in order to increase their Medicare billings.   

A sampling of the hospitals involved, and the amounts they settled for, include:

• Atrium Medical Center, Middletown, Ohio: $4,232,992.50.
• Cedars Sinai Medical Center, Los Angeles, Calif.: $1,485,846.
• Mount Sinai Medical Center, Miami, Fla.: $1,846,194.00.
• Twenty-three hospitals affiliated with HCA Inc., Nashville, Tenn.: $7,145,842.72 (including hospitals located in Florida, Texas, California, Georgia, and more).

The Justice Department has now reached settlements totaling approximately $75 million, with over 100 hospitals, to resolve allegations that they mischarged Medicare for kyphoplasty procedures. 

In addition to today’s settlement, the government previously settled with Medtronic Spine LLC, the corporate successor to Kyphon Inc., for $75 million, to settle allegations that the company defrauded Medicare by counseling hospital providers to perform kyphoplasty procedures as inpatient rather than outpatient procedures.

All but four of the settling facilities announced today were named as defendants in a lawsuit brought by Craig Patrick and Charles Bates, former Kyphon employees, under the whistleblower provisions of the False Claims Act.  The False Claims Act allows private citizens with knowledge of fraud against the government to sue on behalf of the government and share in the recovery.  Patrick and Bates will receive approximately $5.5 million as their share of the settlement.

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.

Ohio-based General Electric Aviation Systems (GEAS) has agreed to pay $6.58 million to resolve allegations that the company knowingly submitted or caused the submission of false claims in connection with contracts made with the Department of Defense, the U.S. Department of Justice announced today.  GEAS manufactures and sells integrated systems and components for commercial, corporate, military and marine aircraft.

GEAS was contracted to manufacture and deliver to the Navy external fuel tanks for use on the F/A-18 Hornet strike fighter jet, which GEAS manufactured at its plant in Santa Ana, California.  In March 2008, a GEAS-manufactured tank failed government testing, which led to a multi-year investigation by local and federal agencies.  As a result, the United States alleged that GEAS knowingly failed to comply with contract specifications and failed to undertake proper quality control procedures in connection with 641 external fuel tanks it delivered to the Navy between June 2005 and February 2008.

The settlement also resolves allegations that, between June 2010 and June 2011, GEAS knew that it falsely represented to another government contractor that GEAS had performed a complete inspection of 228 drag beams to be used on Army UH-60 Blackhawk helicopters, and that those 228 drag beams conformed to all contract specifications. 

Allegations about GEAS’s misconduct at the Santa Ana facility were originally included in a lawsuit filed by Jeffrey Adler, a former GEAS employee, under the whistleblower provisions of the False Claims Act.  The False Claims Act allows a private citizen with knowledge of fraud against the government to sue on behalf of the government and claim a share of the recovery.  Adler’s share of the settlement has not yet been determined.

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.

Connecticut-based United Technologies Corporation has been found liable by a federal court for over $473 million in damages and penalties arising from a contract with the U.S. Air Force for fighter aircraft engines for F-15 and F-16 aircraft between 1985 and 1990, the U.S. Department of Justice announced today.

United Technologies allegedly proposed prices for the engine contract that misrepresented how the company calculated those prices.  Specifically, the government alleged that United Technologies failed to include in its price proposal historical discounts that it received from suppliers, and instead knowingly used outdated information that excluded such discounts.  As a result, the government paid hundreds of millions more than it otherwise would have paid for the engines

The court awarded the government False Claims Act damages and penalties of $364 million, which is the highest recovery ever obtained by the government in a case tried under the Act.  The court also awarded an additional $109 million in damages on the government’s common law claims.  With the addition of prejudgment interest on the latter claims, which the court has yet to calculate, the government anticipates that the total judgment against United Technologies could be in excess of half a billion dollars.  No whistleblowers were involved in initiating this case.  Had there been whistleblowers involved, their share of the recovery would likely have been record-setting as well.

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.