qui tam

Fifty-One Hospitals Settle False Medicare Claims for Over $23M; Whistleblowers to Get $3.5M

Submitted by mma on February 17, 2016
February 17, 2016
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Fifty-one hospitals in 15 states have agreed to pay the federal government more than $23 million to settle allegations that the hospitals knowingly submitted or caused the submission of false claims to federal health care program Medicare for cardiac devices that were implanted in Medicare patients in violation of coverage requirements, the U.S. Department of Justice announced today.  These settlements represent the final stage of a nationwide investigation into the practices of hundreds of hospitals improperly billing Medicare for these devices.  With these additional agreements, the Justice Department’s investigation has now yielded settlements with more than 500 hospitals totaling more than $280 million. 

An implantable cardioverter defibrillator, or ICD, is an electronic device that is implanted near and connected to the heart.  It detects and treats chaotic, extremely fast, life-threatening heart rhythms, called fibrillations, by delivering a shock to the heart, restoring the heart’s normal rhythm.  It is similar in function to an external defibrillator (often found in offices and other buildings) except that it is small enough to be implanted in a patient’s chest.  Only patients with certain clinical characteristics and risk factors qualify for an ICD covered by Medicare. 

Medicare coverage for the device, which costs approximately $25,000, is governed by a National Coverage Determination (NCD).  The Centers for Medicare and Medicaid Services implemented the NCD based on clinical trials and the guidance and testimony of cardiologists and other health care providers, professional cardiology societies, cardiac device manufacturers and patient advocates.  The NCD provides that ICDs generally should not be implanted in patients who have recently suffered a heart attack or recently had heart bypass surgery or angioplasty.  The medical purpose of a waiting period - 40 days for a heart attack and 90 days for bypass/angioplasty - is to give the heart an opportunity to improve function on its own to the point that an ICD may not be necessary.  The NCD expressly prohibits implantation of ICDs during these waiting periods, with certain exceptions.  The Department of Justice alleged that each of the settling hospitals implanted ICDs during the periods prohibited by the NCD.  

The department previously settled with 457 hospitals for more than $250 million. 

The settlements announced today involve 51 hospitals, which are listed on the chart at the USDOJ website.  Most of the settling defendants were named in a qui tam, or whistleblower, lawsuit brought under the False Claims Act, which permits private citizens to bring lawsuits on behalf of the United States and receive a portion of the proceeds of any settlement or judgment awarded against a defendant.  The lawsuit was filed in federal district court in the Southern District of Florida by Leatrice Ford Richards, a cardiac nurse, and Thomas Schuhmann, a health care reimbursement consultant.  The whistleblowers have received more than $3.5 million from the settlements announced today. 

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.

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Rose Radiology Settles False Medicare Claims for $8M; Whistleblowers to Get $1.7M

Submitted by mma on February 9, 2016
February 9, 2016
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Rose Radiology Centers has agreed to pay $8.71 million to settle allegations that it knowingly submitted or caused the submission of false claims to federal health care programs for radiology procedures that were not medically necessary or violated federal regulations, the United States Attorney’s Office for the Middle District of Florida announced last month.

The government alleged that Rose Radiology knowingly submitted false claims to the federal health care programs by administering contrast dye during MRI scans on patients without proper physician supervision. Contrast dye is a chemical that is injected intravenously into the body in order to make certain tissues, abnormalities, or disease processes more clearly visible on an MRI. Federal regulations require that a physician directly supervise the administration of contrast dye when used for an MRI as a potential adverse side effect is anaphylactic shock. Even though Rose Radiology was aware of this safety requirement, there were Rose Radiology locations that rarely, if ever, had a physician present when contrast dye was being administered. 

The settlement also resolves allegations that Rose Radiology improperly billed for radiology procedures referred by chiropractors. The regulations are clear that Medicare does not pay for diagnostic test orders made by chiropractors. To circumvent this prohibition, Rose Radiology would accept orders from chiropractors and bill for them as if the tests were actually ordered by a Rose Radiology employed physician.

In addition, the settlement resolves the claim that Rose Radiology performed and billed for radiology procedures that were never actually ordered by the patients’ treatment providers.  Independent Diagnostic Testing Facilities (“IDTFs”), like Rose Radiology, are not permitted to add any procedures without a written order from the treating physicians. Also resolved was the claim that Rose Radiology submitted claims to Medicare for radiology services performed at locations that were not enrolled as authorized Medicare providers and billing Medicare for those services as if they had actually been performed at a different facility that was properly enrolled with Medicare.

Finally, the settlement resolves allegations that Rose Radiology engaged in the practice of giving kickbacks to referring physicians for the purpose of soliciting radiology referrals from these physicians. It is a violation of both the Anti-Kickback Act and the Stark Law to provide financial benefits to referring physicians. It was alleged that Rose Radiology provided key referral sources financial incentives in the forms of lunches, gift cards, and tickets to concerts or sporting events in exchange for receiving radiology business from these physicians. 

The settlement resolves allegations originally brought in a lawsuit filed by two separate whistleblowers under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery.  The whistleblowers will receive a combined $1.7 million as their share of the recovery in this case.

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.

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Centerra Services Settles False Claims for $7.4M; Whistleblower to Get $1.3M

Submitted by mma on February 2, 2016
February 2, 2016
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Centerra Services International Inc. (fka Wackenhut Services LLC) has agreed to pay $7.4 million to settle allegations that Wackenhut knowingly submitted or caused the submission of false claims by double billing and inflating labor costs in connection with a contract for firefighting and fire protection services in Iraq, the U.S. Department of Justice announced yesterday.  Centerra is a security services company headquartered in Palm Beach Gardens, Florida.

Wackenhut provided U.S. military bases with firefighting and fire protection services under a subcontract with Kellogg Brown & Root Inc. (KBR), the prime contractor for the Army’s contract for logistical support in the military theater, known as LOGCAP III.  LOGCAP III is the third generation of contracts under the Army’s Logistical Civil Augmentation Program.  The government alleged that Wackenhut inflated its labor costs by billing the salaries of certain managers as direct costs under the subcontract, when those salaries had already been charged as indirect costs.  The government further alleged that Wackenhut artificially inflated its labor rate by counting its costs for holidays, vacation, sick leave, rest and recuperation and other variable labor costs twice in calculating the rate.  Wackenhut billed KBR, which then passed on the costs to the government under LOGCAP III.

This settlement resolves a lawsuit filed by whistleblower Gary W. Reno under the qui tam or whistleblower provisions of the False Claims Act.  The act permits private individuals to sue on behalf of the government those who falsely claim federal funds, or cause others to do so, and to receive a share of any funds recovered through the lawsuit.  Reno will receive $1.332 million as his share of the recovery.

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.

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Kindred/RehabCare to Settle False Medicare Claims for $125M; Whistleblowers to Get $24M

Submitted by mma on January 29, 2016
January 29, 2016
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RehabCare Group, RehabCare Group East, and their parent Kindred Healthcare Inc. have agreed to pay $125 million to resolve allegations that the companies knowingly submitted or caused the submission of false claims to Medicare for for rehabilitation therapy services that were not reasonable, necessary and skilled, or that never occurred, the U.S. Department of Justice announced earlier this month.

RehabCare Group Inc. and RehabCare Group East Inc. were purchased by the Louisville, Kentucky-based Kindred Healthcare Inc. in 2011 and they now operate under the name RehabCare as a division of Kindred.  RehabCare is the largest provider of therapy in the nation, contracting with more than 1,000 SNFs in 44 states to provide rehabilitation therapy to their patients.

The government’s complaint alleged that RehabCare’s policies and practices, including setting unrealistic financial goals and scheduling therapy to achieve the highest reimbursement level regardless of the clinical needs of its patients, resulted in Rehabcare providing unreasonable and unnecessary services to Medicare patients and led its SNF customers to submit artificially and improperly inflated bills to Medicare that included those services.  Specifically, the government’s complaint alleged that RehabCare’s schemes included the following:

  • Presumptively placing patients in the highest therapy reimbursement level, rather than relying on individualized evaluations to determine the level of care most suitable for each patient’s clinical needs;
  • Boosting the amount of reported therapy during “assessment reference periods,” thereby causing and enabling SNFs to bill for the care of their Medicare patients at the highest therapy reimbursement level, while providing materially less therapy to those same patients outside the assessment reference periods, when the SNFs were not required to report to Medicare the amount of therapy RehabCare was providing to their patients (a practice known as “ramping”);
  • Scheduling and reporting the provision of therapy to patients even after the patients’ treating therapists had recommended that they be discharged from therapy;
  • Arbitrarily shifting the number of minutes of planned therapy among different therapy disciplines (i.e., physical, occupational and speech therapy) to ensure targeted therapy reimbursement levels were achieved, regardless of the clinical need for the therapy;
  • Providing significantly higher amounts of therapy at the very end of a therapy measurement period not due to medical necessity but rather to reach the minimum time threshold for the highest therapy reimbursement level, to enable SNFs to bill for the care of their Medicare patients accordingly, even though the patients were receiving materially less therapy on preceding days;
  • Inflating initial reimbursement levels by reporting time spent on initial evaluations as therapy time rather than evaluation time;
  • Reporting that skilled therapy had been provided to patients when in fact the patients were asleep or otherwise unable to undergo or benefit from skilled therapy (e.g., when a patient had been transitioned to palliative end-of-life care); and
  • Reporting estimated or rounded minutes instead of reporting the actual minutes of therapy provided.

In addition to RehabCare, the Department of Justice also announced settlements today with four SNFs for their role in submitting claims to Medicare that were false because they were based in part on therapy provided by RehabCare that was not reasonable, necessary and skilled, or that did not occur.  These settlements include:  A $3.9 million settlement with Wingate Healthcare Inc. and 16 of its facilities in Massachusetts and New York; A $2.2 million settlement with THI of Pennsylvania at Broomall LLC and THI of Texas at Fort Worth LLC; A $1.375 million settlement with Essex Group Management and two of its Massachusetts facilities, Brandon Woods of Dartmouth and Blaire House of Milford and a $750,000 settlement with Frederick County, Maryland, which formerly operated the Citizens Care skilled nursing facility.  The department had previously reached settlements with a number of other SNFs for similar conduct. 

The settlement with RehabCare resolves allegations originally brought in a lawsuit filed under the qui tam, or whistleblower,provisions of the False Claims Act by Janet Halpin, a physical therapist and former rehabilitation manager for RehabCare and Shawn Fahey, an occupational therapist who worked for RehabCare.  The act permits private parties to sue on behalf of the government for false claims for government funds and to receive a share of any recovery.  The government may intervene and file its own complaint in such a lawsuit, as it has done in this case.  The whistleblowers will receive nearly $24 million as their share of the recovery from RehabCare.

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.

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Coloplast and Liberator Medical to Pay $3.6M for False Medical Claims; Whistleblower Share TBD

Submitted by mma on January 27, 2016
January 27, 2016
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Coloplast Corp. and Liberator Medical Supply have agreed to pay $3.16 million and $500,000, respectively, to settle allegations that the companies knowingly submitted or caused the submission of false claims to federal health care programs, the U.S. Department of Justice announced last month.

The settlement with Coloplast resolves allegations that it paid kickbacks to Byram Healthcare Centers, Inc.; CCS Medical, Inc.; Liberator; Liberty Medical, Inc. and Handi Medical, Inc., in return for marketing promotions and conversion campaigns.  In the case of Byram, Liberty and Handi, Coloplast’s promotional campaigns allegedly included kickbacks in the form of funding for cash incentives – sometimes known as “spiffs” – paid to the suppliers’ sales personnel to induce them to refer patients to Coloplast products.  In other instances, Coloplast allegedly gave rebates or price concessions as inducements for the promotional campaigns. 

The settlement with Liberator resolves Liberator’s alleged receipt of kickbacks from Coloplast in the form of price concessions, in return for Liberator’s agreement to conduct two campaigns promoting Coloplast ostomy products to Liberator’s customers.

The False Claims Act settlements resolve allegations brought in a whistleblower lawsuit filed by two former employees of Coloplast under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery.  Under the False Claims Act, a whistleblower is entitled to receive a share of the federal recovery.  The whistleblowers’ share of the Coloplast and Liberator settlements has not been determined.  Claims against other defendants in the case remain outstanding.

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.

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Dr. Bostwick Settles False Medicare Claims for $3.75M; Whistleblower to Get $2.5M

Submitted by mma on January 25, 2016
January 25, 2016
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Dr. David G. Bostwick, former founder, owner, and chief executive officer of Bostwick Laboratories, has agreed to pay up to $3.75 million to the United States federal government for to resolve alleged violations of the False Claims Act, the U.S. Department of Justice announced earlier this month.

The settlement announced today resolves claims that Dr. Bostwick allegedly directed Bostwick Laboratories to bill Medicare and Medicaid for expensive cancer detection tests known as Fluorescent In Situ Hybridization (FISH) tests, as well as other tests, that were not medically necessary and were performed without the treating physicians’ consent or order.  FISH tests are used to detect bladder cancer.  During the time period covered by the settlement, Medicare reimbursement for FISH tests ranged from $456 to $966 per test. 

The settlement also resolves allegations that Dr. Bostwick, through Bostwick Laboratories, offered various discounts and billing arrangements to treating physicians to induce physicians to refer business to Bostwick Laboratories in violation of the federal Anti-Kickback Statute.  The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by federally funded programs.  The Anti-Kickback Statute is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient.

Under the settlement announced today, Dr. Bostwick has agreed to pay over $2.6 million plus an additional $1.125 million if certain financial contingencies occur within the next five years - for a total potential payment of up to $3.75 million.  On Aug. 28, 2014, Bostwick Laboratories previously agreed to pay over $6.5 million to resolve the allegations in this lawsuit.    

The allegations resolved by these settlements were originally brought by whistleblower Michael Daugherty, who works in the industry, under the qui tam provisions of the False Claims Act.  The act permits private citizens to sue on behalf of the government those who falsely claim federal funds.  The act allows the whistleblower to receive a share of any funds recovered through the lawsuit.  Daugherty will receive over $2.5 million from the government’s settlements with Dr. Bostwick and Bostwick Laboratories.

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.

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Novum Structures to Settle False Claims for $3M; Whistleblower to Get $400K

Submitted by mma on January 8, 2016
January 8, 2016
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Wisconsin-based Novum Structures LLC has agreed to plead guilty and pay $3 million to resolve criminal and civil liability arising from improper use of foreign materials on construction projects involving federal funds, the U.S. Department of Justice announced last week. Novum specializes in the design and construction of glass space frames often used in roofs and atrium enclosures.  

The agreement resolves a criminal Information alleging that Novum repackaged materials and falsified documents relating to some federally funded construction projects in order to hide that it was using noncompliant foreign materials.  According to an agreement reached with the government, Novum will plead guilty to one count of concealing a material fact, in violation of 18 U.S.C. § 1001, and pay a $500,000 criminal fine. 

In addition to the criminal fine, Novum has agreed to pay $2.5 million to resolve civil allegations under the False Claims Act that its conduct caused the submission of false claims for payment.  Specifically, the civil settlement resolves allegations that Novum caused false claims by knowingly – and in violation of its contractual obligations – using noncompliant foreign materials on several federally funded construction projects.

Construction projects funded by the U.S. government are generally subject to laws requiring the use of domestic materials, such as the Buy American Act; the Federal Transit Administration’s Buy America provision; and § 1605 of the American Recovery and Reinvestment Act.  The contracts involved in this case covered both government buildings and transit projects partially paid for with federal funds.

As part of the settlement agreement, Novum has agreed not to contest debarment from federally funded projects.

The allegations resolved by the civil settlement were originally brought by whistleblower Brenda King under the qui tam, or whistleblower, provisions of the False Claims Act.  The act permits private parties to sue on behalf of the government those who falsely claim federal funds.  The act also allows the whistleblower to receive a share of any funds recovered through the lawsuit.  King will receive approximately $400,000 as her share of the civil settlement.

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University Furnishings to Pay $15M for False Claims; Whistleblower to Get $2.25M

Submitted by mma on January 5, 2016
January 5, 2016
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University Furnishings LP and its general partner, Freedom Furniture Group Inc. (collectively, “University Furnishings”) have agreed to pay $15 million to resolve allegations that the companies knowingly submitted or caused the submission of false claims by making false statements to avoid paying duties on wooden bedroom furniture imported from China, the U.S. Department of Justice announced last month.  University Furnishings sells furniture for student housing.

The government alleged that University Furnishings knowingly misclassified or conspired with others to misclassify wooden bedroom furniture on documents presented to U.S. Customs and Border Protection (CBP) to avoid paying antidumping duties on imports of wooden bedroom furniture manufactured in the People’s Republic of China.  Specifically, University Furnishings allegedly classified the furniture as office and other types of furniture not subject to duties while selling the furniture in the student housing market for use in dormitory bedrooms.  The Department of Commerce assesses and CBP collects antidumping duties to protect U.S. businesses by offsetting unfair foreign pricing and foreign government subsidies.

The allegations resolved by the settlement were originally brought by University Loft Company under the qui tam or whistleblower provisions of the False Claims Act.  The act permits private parties to sue on behalf of the United States those who falsely claim federal funds or, as in this case, those who avoid paying funds owed to the government or cause or conspire in such conduct.  The act also allows the whistleblower to receive a share of any funds recovered through the lawsuit.  University Loft Company will receive $2.25 million as its 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.

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21st Century Oncology Settles False Medicare Claims for $19.75M; Whistleblower to Get $3.2M

Submitted by mma on December 28, 2015
December 28, 2015
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21st Century Oncology LLC has agreed to pay $19.75 million to the federal government to resolve allegations that it knowingly submitted or caused the submission of false claims to federal health care programs, the U.S. Department of Justice announced earlier this month.  21st Century is a nationwide provider of integrated cancer care services that is headquartered in Fort Myers, Florida. 

The settlement announced today resolves allegations that 21st Century submitted claims to Medicare and Tricare for fluorescence in situ hybridization, or “FISH,” tests that were not medically necessary.  FISH tests are laboratory tests performed on urine that can detect genetic abnormalities associated with bladder cancer.  The government alleged that 21st Century submitted claims for unnecessary FISH tests that were ordered by four of its urologists, Dr. Meir Daller, Dr. Steven Paletsky, Dr. David Spellberg and Dr. Robert Scappa, all of whom practiced in the Fort Myers area.  The government also alleged that 21st Century encouraged these physicians to order unnecessary FISH tests by offering bonuses that were based in part on the number of tests referred to 21st Century’s laboratory.  Today’s settlement resolves the civil liability of 21st Century only. 

The settlement resolves allegations originally brought in a lawsuit filed by a whistleblower under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery.  The whistleblower, a former 21st Century Oncology LLC medical assistant, will receive $3.2 million as her share of the recovery in this case.

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.

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32 Hospitals Pay Over $28M to Resolve False Medicare Claims; Whistleblowers to Get $4.75M

Submitted by mma on December 23, 2015
December 23, 2015
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Thirty-two hospitals located throughout 15 states have agreed to pay the United States a total of more than $28 million to settle allegations that the health care facilities submitted false claims to Medicare for minimally-invasive kyphoplasty procedures, the U.S. Department of Justice announced last week.  

Kyphoplasty is a minimally-invasive procedure used to treat certain spinal fractures that often are due to osteoporosis.  In many cases, the procedure can be performed safely and effectively as an outpatient procedure without any need for a more costly inpatient hospital admission.  The settlements announced today resolve allegations that the 32 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.

In addition to settlements with over 130 hospitals, the government previously settled with Medtronic Spine LLC, the corporate successor to Kyphon Inc., for $75 million to settle allegations that the company caused false claims to be submitted to Medicare by counseling hospital providers to perform kyphoplasty procedures as inpatient rather than outpatient procedures.       

All but three of the settling facilities announced today were named as defendants in a qui tam, or whistleblower, lawsuit brought under the False Claims Act, which permits private citizens to bring lawsuits on behalf of the United States and receive a portion of the proceeds of any settlement or judgment awarded against a defendant.  The lawsuit was filed in federal district court in Buffalo, New York, by Craig Patrick and Charles Bates.  Patrick is a former reimbursement manager for Kyphon, and Bates was formerly a regional sales manager for Kyphon in Birmingham.  The whistleblowers will receive a total of approximately $4.75 million from the settlements announced today. 

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.

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