Healthcare Fraud

A settlement has been reached to resolve False Claims Act allegations against Health Management Associates LLC.

Health Management Associates (HMA), agreed to pay the sum to resolve criminal and civil claims as part of a deal in which a subsidiary also agreed to plead guilty to conspiring to commit healthcare fraud.

According to the government, allegedly HMA knowingly billed Medicare and other government insurance programs for higher-paying inpatient services that should have been billed as outpatient or observation services, paid money to physicians in return for patient referrals, and submitted inflated claims for emergency department fees.

Allegedly, HMA set mandatory admissions rate benchmarks for patients presented at hospital emergency departments in order to boost its revenue and threatened to fire doctors who did not increase admissions.

Reportedly, from 2003 to 2011, two of HMA’s hospitals in Florida also billed federal healthcare programs for services referred to them by doctors who received free office space and direct payments in exchange.

Furthermore, allegedly excessive payments were made to a large physician group and a local surgeon in exchange for patient referrals by two hospitals owned by HMA in Pennsylvania.

 “The FBI will not stand by when there are allegations that a company operates a corporate-wide scheme to increase their financial gain at the expense of the U.S. government," Johnson said in the release. "We appreciate those who come forward with allegations of criminal misconduct and recognize the importance of the public’s assistance in our work.”

HMA was acquired by Community Health Systems, based in Franklin, Tennessee, in January 2014.

The allegations resolved by the settlement were from eight whistleblower lawsuits filed under the False Claims Act, which permits private parties to sue on behalf of the government for false claims and to receive a share of any recovery. The eight whistleblower suits were filed in various districts and were transferred to federal court in the District of Columbia as part of a multi-district litigation meant to speed the handling of the complex cases.

A settlement has been reached to resolve False Claims Act allegations against DaVita Medical Holdings LLC.

The allegations arose from a lawsuit that claimed HealthCare Partners Holdings LLC, doing business as DaVita Medical Holdings LLC provided inaccurate information that caused Medicare Advantage Plans to receive inflated Medicare payments.

“Federal healthcare programs rely on the accuracy of information submitted by healthcare providers to ensure that managed care plans receive the appropriate compensation,” said Assistant Attorney General Joseph H. Hunt of the Department of Justice’s Civil Division. “We will pursue those who undermine the integrity of the Medicare program and the data it relies upon. This also illustrates that the Department encourages and incentivizes health care organizations to make voluntary disclosures to the government when they identify false claims.”

Under Medicare Advantage, Medicare beneficiaries have the option of enrolling in and obtaining health care from Medicare Advantage Plans that are owned and operated by private Medicare Advantage Organizations (MAOs). 

According to a whistleblower, HealthCare Partners engaged in “one-way” chart reviews in which it scoured its patients’ medical records for diagnoses its providers may have failed to record.  It then submitted these “missed” diagnoses to MAOs to be used by them in obtaining increased Medicare payments.  At the same time, it ignored inaccurate diagnosis codes that should have been deleted and that would have decreased Medicare reimbursement or required the MAOs to repay money to Medicare.

The whistleblower, James Swoben, who was a former employee of a MAO that did business with DaVita, will receive $10,199,100 for the settlement of the “one way” allegations.

A settlement has been reached to resolve False Claims Act allegations against Reliant Rehabilitation Holdings Inc.

The allegations arose from a lawsuit that claimed Reliant Rehabilitation Holdings Inc (Reliant) paid kickbacks to skilled nursing facilities and physicians in connection with care provided to Medicare beneficiaries as a way of improperly promoting Reliant’s rehabilitation therapy business.

According to the government, allegedly between April 1, 2013, and May 1, 2017, the Company knowingly offered improper inducements, in the form of Reliant-employed nurse practitioners who worked at client nursing homes without charge or for a nominal, below fair market fee in order to induce or reward nursing homes for contracting with Reliant to provide rehabilitation therapy for their residents.  In addition, allegedly, Reliant violated the FCA by causing the submission of claims to Medicare that were tainted by improper contracts between Reliant and physicians working at skilled nursing facilities that offered the physicians above fair market compensation for supervising and collaborating with Reliant nurse practitioners in exchange for the facilities’ therapy business.

“Paying illegal remuneration to nursing homes and doctors to increase the bottom line – as contended by the government in this case – is unacceptable as it too often sacrifices the best interests of patients to profit-making schemes,” said CJ Porter, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services.  “Patients and taxpayers deserve better.”

The whistleblower, Dr. Thomas Prose, will receive approximately $915,000 as part of the settlement.

A settlement has been reached to resolve False Claims Act allegations against William Beaumont Hospital.

The allegations arose from lawsuits that claimed William Beaumont Hospital of improper relationships with eight referring physicians, resulting in the submission of false claims to the Medicare, Medicaid and TRICARE programs.

Reportedly, the settlement resolved allegations that between 2004 and 2012, the hospital system overpaid the doctors and provided them with free or below-market office space and other perks so that they would refer more patients to Beaumont. Furthermore, the settlement resolves claims that Beaumont allegedly misrepresented that a CT radiology center qualified as an outpatient department of Beaumont in claims to federal health care programs.

According to the Justice Department, William Beaumont Hospital may have violated the federal Stark Law, Anti-Kickback Statute and False Claims Act, as it affected claims made to Medicare, Medicaid and TRICARE programs. The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce patient referrals covered by Medicare and Medicaid. The Stark Law prohibits a hospital from billing Medicare for services referred by doctors with whom the hospital has an improper financial arrangement, such as excessive compensation.

“Health care providers that offer or accept financial incentives in exchange for patient referrals undermine both the financial integrity of federal health care programs and the public’s trust in medical institutions,” said HHS-OIG Special Agent in Charge Lamont Pugh.  “Our agency will continue to protect both patients and taxpayers by holding those who engage in fraudulent kickback schemes accountable.”

As a result of this settlement, Beaumont will pay $82.74 million to the United States and $1.76 million to the State of Michigan. In addition, Beaumont has entered into a five-year Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General which includes, among other things, an arrangements review to be conducted by an Independent Review Organization.

The whistleblower’s shares to be awarded in the cases have not yet been determined.

A settlement has been reached to resolve False Claims Act allegations against Prime Healthcare Services and Prime’s Founder and Chief Executive Officer.

The allegations arose from a lawsuit that claimed Prime Healthcare Services and CEO, Dr. Prem Reddy knowingly submitted false claims to Medicare by admitting patients who only needed cheaper, outpatient care.

As part of the settlement, CEO Dr. Prem Reddy, will pay $3.25 million, while Prime Healthcare Services will pay $61.75 million.

Reportedly, the settlement involves the following 10 Prime Healthcare Services-owned hospitals and four Prime Healthcare Foundation-owned hospitals in California:

• Alvarado Hospital Medical Center
• Garden Grove Medical Center
• La Palma Intercommunity Hospital
• Desert Valley Hospital
• Chino Valley Medical Center
• Paradise Valley Hospital
• San Dimas Community Hospital
• Shasta Regional Medical Center
• West Anaheim Medical Center
• Centinela Hospital Medical Center
• Sherman Oaks Hospital
• Montclair Hospital Medical Center
• Huntington Beach Hospital
• Encino Hospital Medical Center

According to the government, allegedly, from 2006 through 2013, Prime engaged in a deliberate corporate-driven scheme to increase inpatient admissions of Medicare beneficiaries who originally presented to the Emergency Departments at 14 Prime hospitals in California.  The government claimed that the inpatient admission of these beneficiaries was not medically necessary because their symptoms and treatment needs should have been managed in a less costly outpatient or observation setting. Hospitals generally receive significantly higher payments from Medicare for inpatient admissions as opposed to outpatient treatment; therefore, the admission of beneficiaries who do not need inpatient care, as alleged here, can result in substantial financial harm to the Medicare program.  The settlement also resolves allegations that, from 2006 through 2014, Prime engaged in up-coding by falsifying information concerning patient diagnoses, including complications and comorbidities, in order to increase Medicare reimbursement.

“This settlement reflects our ongoing commitment to ensure that health care providers appropriately bill Medicare,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Charging the government for higher cost inpatient services that patients do not need, and for higher-paying diagnoses than the patients have, wastes the country’s valuable health care resources.”

As part of the agreement, Prime Healthcare Services must abide by a five-year “corporate integrity agreement” that requires the company to hire independent consultants to verify its Medicare billings, records show.

The Whistleblower, Karin Berntsen, a former Director of Performance Improvement at Alvarado Hospital Medical Center in San Diego, will receive $17,225,000 as her portion of the settlement amount.

A settlement has been reached to resolve False Claims Act allegations against Grenada Lakes Medical Center.

The allegations arose from a lawsuit that claimed Grenada Lakes Medical Center (GLMC) sought and received reimbursement from Medicare for services that were not medically reasonable or necessary.

According to the government, allegedly, from January 2005 until April 2013, the hospital submitted claims for Intensive Outpatient Psychotherapy (IOP) services that did not qualify for Medicare reimbursement.  The IOP services in question were performed on GLMC’s behalf by Allegiance Health Management, a post-acute healthcare management company based in Shreveport, Louisiana, but billed to Medicare by GLMC directly.

“We will not tolerate hospitals that place profit over legitimate patient care by billing for medically unnecessary services,” said C.J. Porter, Special Agent in Charge for the U.S. Department of Health and Human Services Office of Inspector General. “In coordination with our partners, we will continue to investigate these cases and ensure taxpayer funds are used as intended.”

The Whistleblower, Ryan Ladner, will receive approximately $195,000 as his share of the GLMC settlement.

A settlement has been reached to resolve False Claims Act allegations against Early Autism Project Inc.

The allegations arose from a lawsuit that claimed Early Autism Project Inc submitted false claims to the TRICARE and the South Carolina Medicaid programs for therapy services for children with autism.

According to the government, allegedly Early Autism Project Inc (EAP) billed TRICARE and South Carolina’s Medicaid program for Applied Behavioral Analysis therapy services for children with autism that either misrepresented the services provided or where the services were not provided at all. Allegedly, EAP-devised program designed to maximize profits by billing Medicaid for administrative and management functions of the company. Medicaid does not pay for therapy services by individuals who are not actively working with the child for whom the therapy is billed. In addition, allegedly EAP allowed its therapists to regularly “pad” the hours it billed for therapy services to the TRICARE program and to South Carolina Medicaid, so that these programs regularly paid for therapy services that were not provided.

“Companies that commit to providing intensive behavioral treatment to children with autism, at a pivotal time of that child’s development, should be held accountable if they do not provide the services, but nevertheless request payment for those services,” said Barbara Bowens, Acting United States Attorney for this case and Civil Chief for the United States Attorney’s Office for the District of South Carolina.  “The United States Attorney’s Office is committed to protecting the federally-funded programs that make it possible for children with special needs to receive these vital services.”

The Whistleblower, a former employee of EAP, Olivia Zeigler, will receive $435,000.

Reportedly, as part of the settlement, EAP, and its parent company, ChanceLight Inc have also entered into a Corporate Integrity Agreement with the Department of Health and Human Services, Office of Inspector General, which seeks to ensure future corporate compliance by requiring internal compliance reforms, including hiring an independent review organization to conduct annual claims reviews.

A settlement has been reached to resolve False Claims Act allegations against nine skilled nursing facilities and a pair of consulting firms.

The allegations arose from a lawsuit that claimed Southern SNF Management Inc, Rehab Services in Motion dba Dynamic Rehab and nine affiliated skilled nursing facilities in Florida and Alabama submitted or caused the submission of false claims to Medicare for medically unnecessary rehabilitation therapy services.

According to the government, allegedly, between October 2009 and December 2013, Southern SNF, Dynamic Rehab and the nine skilled nursing facilities’ corporate policies and practices encouraged the provision of medically unreasonable and unnecessary therapy without regard for patient’s individual clinical needs. The companies’ actions resulted in the submission of false claims based on inflated Resource Utilization Group levels.  Medicare reimburses skilled nursing facilities based on a patient’s Resource Utilization Group level, which is supposed to be determined by the amount of skilled rehabilitation therapy required by the patient.

“Today’s settlement demonstrates our continuing commitment to ensure that Medicare providers do not place their own financial gain over patients’ clinical needs,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.  “Such conduct is especially unacceptable when it seeks to take advantage of older Americans, who are some of the most vulnerable members of our community.”

Three whistleblowers, former SNF Management employees La-Wanda Davis, Tramecier Donald, and Megan Dinkins, will receive $2 million as part of the settlement.

A settlement has been reached to resolve False Claims Act allegations against AngioDynamics Inc.

The allegations arose from a lawsuit that claimed AngioDynamics Inc caused healthcare providers to submit false claims to federal healthcare programs over the use of two medical devices.

“The Justice Department is committed to holding medical device manufacturers accountable, which includes requiring that they follow all laws designed to ensure that medical devices are safe and effective,” said Acting Assistant Attorney General Chad A. Readler for the Justice Department’s Civil Division.  “When manufacturers make misleading statements concerning the use of their products in ways that have not been cleared by the FDA, it undermines patient care.  Taxpayers and patients deserve better.”

AngioDynamics will pay $11.5 million to resolve allegations that the company caused false claims to be submitted to government healthcare programs for procedures involving an unapproved drug-delivery device that was marketed with false and misleading promotional claims.

According to the government, allegedly, from May 2006 through December 2011, AngioDynamics served as the U.S. distributor for Biocompatibles plc, the manufacturer of LC Bead, and marketed LC Bead for use as a drug-delivery device in combination with chemotherapy drugs.  Moreover, AngioDynamics personnel routinely claimed that this particular use of LC Bead, which FDA had twice declined to approve, was “better”, “superior”, “safer” and “less toxic” than alternative treatments, even though there was insufficient clinical evidence to support the truthfulness of these claims.  Furhtermore, allegedly, AngioDynamics was aware that many insurers declined to provide coverage for certain LC Bead procedures and, as a result, instructed healthcare providers to use inaccurate billing codes when submitting claims for such uses. 

Reportedly, the federal share of the civil settlement is approximately $10.9 million, and the state Medicaid share of the civil settlement is approximately $600,000.

The Whistleblower, a former AngioDynamics marketing employee, Ryan Bliss, will receive $2.3 million as part of the settlement.

A settlement has been reached to resolve False Claims Act allegations against Health Quest Systems Inc.

The allegations arose from a lawsuit that claimed Health Quest Systems Inc and certain of its subsidiaries Health Quest and Putnam Health Center (PHC) submitted inflated and otherwise ineligible claims for payment.

Reportedly, Health Quest Systems and Putnam Health Center acknowledged submitting improper claims for health-related services, including federally funded health care programs.

According to the government, allegedly, from April 1, 2009, through June 23, 2015, Health Quest submitted claims for evaluation and management services but did not sufficiently document the services to support the level of service billed. Allegedly, from April 1, 2011, through August 2014, Health Quest submitted claims for home health services that lacked sufficient medical records to support the claim. Allegedly, from March 1, 2014, through Dec. 31, 2014, Putnam Health Center submitted “allegedly false claims for inpatient and outpatient services referred to [the hospital] by two orthopedic physicians, in alleged violation of the Physician Self-Referral Law.

“This resolution is a testament to our deep commitment to protecting the integrity of federally- funded healthcare programs,” said Acting Assistant Attorney General Chad A. Readler for the Justice Department’s Civil Division.  “We are determined to hold accountable healthcare providers that knowingly claim taxpayer funds to which they are not entitled.”

The settlement includes an additional payment of $895,427 that Health Quest will make to the state, which jointly funds New York’s Medicaid program.

In addition, Health Quest also agreed to enter into a Corporate Integrity Agreement with HHS-OIG to address future compliance.

The three whistleblowers, former employees of Health Quest, Tim Cleary will receive $1,893,092, John Betaudier and Carolyn Carroll will receive, collectively, $56,266, and Gregory Folta will receive at least $875,546 from the settlement.