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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.

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.

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.

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.

Education Management Corp. (EDMC), the second-largest for-profit educational company in the United States of America, will pay $95.5 million to settle allegations that EDMC knowingly submitted or caused the submission of false claims by falsely certifying that it was in compliance with Title IV of the Higher Education Act (HEA) and parallel state statutes. 

The primary allegation was that EDMC unlawfully recruited students, in contravention of the HEA’s Incentive Compensation Ban (ICB), by running a high pressure boiler room where admissions personnel were paid based purely on the number of students they enrolled.  In addition to resolving these and other FCA claims, the global settlement also encompasses an investigation by a consortium of state Attorneys General, of consumer-fraud allegations involving deceptive and misleading recruiting practices.

EDMC, which is headquartered in Pittsburgh, Pennsylvania, operates nationwide under four post-secondary school brands: the Art Institutes, South University, Argosy University and Brown-Mackie College.  Student enrollment across EDMC’s school brands exceeds 100,000 students.   

The settlement resolves four separate FCA lawsuits filed in federal court in Pittsburgh, Pennsylvania, and Nashville, Tennessee, under the qui tam, or whistleblower, provisions of the act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.    

The United States and five states intervened and actively litigated one of those four whistleblower lawsuits, United States ex rel. Washington, in the Western District of Pennsylvania.  The United States’ complaint in intervention alleged systemic violations of Title IV of the HEA’s ICB and parallel state provisions, which prohibit schools from paying recruiters based on their success in securing enrollments.  Specifically, the United States and the plaintiff states claimed that EDMC falsely certified to the U.S. Department of Education and various state offices of higher education that it was complying with the ICB, in order to be eligible to receive the federal grant and loan dollars that compose the majority of EDMC’s revenue.  In reality, according to the United States’ complaint in intervention, EDMC was running a high pressure sales business and paid its recruiters based only on the number of students they enrolled.  As a result of these allegedly false certifications, EDMC improperly enriched itself for more than 10 years with federal and state grant and loan dollars.  More broadly, EDMC’s alleged conduct resulted in exactly the problems that Congress sought to curtail when it enacted the ICB:  the enrollment of students in programs for which they lacked the necessary skills and qualifications, unsustainable student debt and default rates, and schools’ pursuit of profits ahead of a legitimate educational mission. 

The global settlement with EDMC also resolves three additional federal FCA lawsuits in which the government did not intervene, all involving various violations of Title IV of the HEA by EDMC. 

Finally, the global settlement resolves a consumer fraud investigation by a consortium of 40 state Attorneys General, into EDMC’s deceptive and misleading recruiting practices.  The consumer fraud settlement requires EDMC to undertake various compliance obligations, including detailed disclosure obligations to students; prohibitions on deceptive or misleading recruiting practices and oversight by an administrator to ensure compliance. 

The global settlement amount of $95.5 million reflects EDMC’s financial condition and current ability to pay.  The settlement proceeds will be shared among the United States, the co-plaintiff states and the whistleblowers and their counsel in the four FCA cases, and includes funds allocated for the compliance expenses of the state consumer fraud settlement, including the costs of the administrator and the acquisition and use of a sophisticated voice analytics system to record and analyze recruiters’ calls with students.  The United States will receive $52.62 million from the settlement, and will pay $11.3 million collectively to the relators in the four qui tam cases. 

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.