Healthcare Fraud

A settlement has been reached to resolve False Claims Act allegations against CHRISTUS St. Vincent Regional Medical Center and CHRISTUS Health.

The allegations arose from a lawsuit that claimed CHRISTUS St. Vincent Regional Medical Center and CHRISTUS Health violated the False Claims Act by making illegal donations to county governments, which were used to fund the state share of Medicaid payments to the hospital.

According to the government, CHRISTUS St. Vincent Regional Medical Center and CHRISTUS Health allegedly made illegal payments in 2001-2009 to county governments that were used to pay for New Mexico's portion of Medicaid payments to Christus.

Under New Mexico's Sole Community Provider program, supplemental Medicaid funds were provided to rural hospitals. The federal government reimbursed New Mexico for about 75 percent of its payments under the SCP program, while New Mexico's 25 percent "matching" share of payments had to come from state or county funds. This excluded donations from private hospitals. The program ended in 2014.

“Protecting the integrity of the Medicaid program is crucial because millions of Americans, including hundreds of thousands of New Mexicans, depend on the program for medical care and related services,” said Acting U.S. Attorney James D. Tierney for the District of New Mexico. “This case illustrates our commitment to ensuring that government funds are legally obtained and used for their intended purposes. We will use all available civil remedies to recover the ill-gotten gains obtained by those who defraud government health care programs.”

Reportedly, this settlement resolves allegations originally brought in a lawsuit filed by a former Los Alamos County, New Mexico Indigent Healthcare Administrator.

The whistleblowers' share of the settlement will be $2.249 million.

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

The allegations arose from a lawsuit that claimed Novo Nordisk Inc failed to comply with the FDA-mandated Risk Evaluation and Mitigation Strategy (REMS) for its Type II diabetes medication Victoza.

According to the government, the Food and Drug Administration approved Victoza for sale in 2010; it required Novo Nordisk to provide information to physicians about the potential risk of a rare form of cancer called medullary thyroid carcinoma (MTC). Allegedly, company sales representatives gave information that created a false or misleading impression about the required risk message that led some doctors to be unaware of the potential risks.

Reportedly, a 2011 survey showed that half of primary care doctors were unaware of the potential risk of MTC, the FDA required Novo Nordisk to company to change its procedures to increase awareness of the risk. Allegedly, Novo Nordisk told sales representatives to provide statements to doctors that obscured information about the risk.

“Novo Nordisk Inc. sales representatives misled physicians by failing to accurately disclose a potential life threatening side effect of a prescription drug, and needlessly increased risks to patients being treated with this drug,” said Assistant Director in Charge Andrew W. Vale of the FBI’s Washington Field Office. “The FBI is committed to ensuring that the private industry provides honest and accurate risk information to the public and will continue to work closely with our law enforcement partners to investigate companies who do not comply with FDA-mandated policies.”

The settlements include a payment of $46.5 million for violations of the False Claims Act between 2010 and 2014 and $12.5 million for violations of the federal Food, Drug and Cosmetic Act from 2010 to 2012. Out of those settlements, $3.32 million will go to state Medicaid programs.

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

The allegations arose from a lawsuit that claimed Galena Biopharma Inc paid kickbacks to doctors to induce them to prescribe its fentanyl-based drug Abstral.

According to the government, Galena allegedly paid multiple types of kickbacks to induce doctors to prescribe Abstral, including providing more than 85 free meals to doctors and staff from a single, high-prescribing practice; paying doctors $5,000, and speakers $6,000, plus expenses, to attend an “advisory board” that was partly planned, and attended, by Galena sales team members and paying approximately $92,000 to a physician-owned pharmacy under a performance-based rebate agreement to induce the owners to prescribe Abstral.

Allegedly, Galena also paid doctors to refer patients to the company’s RELIEF patient registry study, which was nominally designed to collect data on patient experiences with Abstral, but acted as a means to induce the doctors to prescribe Abstral.

“Given the dangers associated with opioids such as Abstral, it is imperative that prescriptions be based on a patient’s medical need rather than a doctor’s financial interests,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “The Department of Justice intends to vigorously pursue those who offer and receive illegal inducements that undermine the integrity of government health care programs.”

The whistleblowers' share of the settlement will be $1.2 million.

A settlement has been reached to resolve False Claims Act allegations against Family Medicine Centers of South Carolina LLC, Its Co-Owner, and Its Laboratory Director.

Family Medicine Centers of South Carolina LLC (FMC) will pay $1.56 million under the settlement, while its principal owner and former CEO Stephen Serbin and its former Laboratory Director Victoria Serbin have also agreed to pay $443,000.

The allegations arose from a lawsuit that claimed Family Medicine Centers of South Carolina LLC, Its Co-Owner, and Its Laboratory Director submitted and caused the submission of false claims to the Medicare and TRICARE programs.

According to the government, allegedly FMC, Dr. Serbin and Victoria Serbin were responsible for submitting false claims to Medicare and Tricare for medically unnecessary laboratory services. They allegedly created custom laboratory panels of diagnostic tests that aren’t appropriate for routine measurement and performed the tests without an order from the treating physician. They allegedly implemented standing orders to make sure these tests were performed with specific frequency, and not because of clinical need. They allegedly programmed the FMC billing software to change certain billing codes for laboratory tests to ensure Medicare would pay.

Also, allegedly FMC submitted claims to Medicare that violated the physician self-referral prohibition, known as the Stark Law, which is intended to prevent a physician’s medical judgment from being compromised by improper financial incentives. Allegedly, FMC’s incentive compensation plan paid doctors a percentage of the value of laboratory and other diagnostic tests that these same doctors ordered through FMC. Family Medicine Centers of South Carolina then billed Medicare for the costs.

“Healthcare decisions should be made by physicians based on medical science and not with regard to maximizing the doctor’s own income,” said U.S. Attorney Beth Drake for the District of South Carolina. “Our goal in bringing this case was not only to recover money for improper healthcare claims, but also to deter similar conduct and promote health care affordability.”

Reportedly, as part of the settlement, FMC and the Serbins have also agreed to enter into a Corporate Integrity Agreement with the Department of Health and Human Services, Office of Inspector General (HHS-OIG), which ensures the Serbins will have no management role in FMC for five years and obligates FMC to undertake other substantial internal compliance reforms, including hiring an independent review organization to conduct annual claims reviews.

The Whistleblower, Dr. Schaefer, formerly employed by FMC, will receive $340,510.

A settlement has been reached to resolve False Claims Act allegations against Mylan Inc and Mylan Specialty L.P.

The allegations arose from a lawsuit that claimed Mylan Inc and Mylan Specialty L.P. knowingly misclassified EpiPen, a branded epinephrine auto-injector drug, as a generic drug to avoid paying rebates owed to Medicaid.

According to the government, Mylan allegedly improperly avoided paying state Medicaid programs the higher rebates for branded drugs by misclassifying EpiPen as a generic drug, even though EpiPen had no FDA-approved therapeutic equivalents and even though Mylan marketed and priced EpiPen as a brand name drug.  Mylan raised the price of EpiPen by approximately 400% between 2010 and 2016.

Reportedly, as part of this settlement, Mylan has also entered into a corporate integrity agreement with the Department of Health and Human Services Office of Inspector General (HHS-OIG) that requires, among other things, an independent review organization to annually review multiple aspects of Mylan’s practices relating to the Medicaid drug rebate program.

Sanofi, a competing pharmaceutical manufacturer brought this matter forward. In 2016, Sanofi filed a complaint against Mylan under the qui tam provisions of the False Claims Act, which permits private parties to sue on behalf of the government and to receive a share of any recovery.

Sanofi's share of the settlement will be $38.7 million.

“Mylan misclassified its brand name drug, EpiPen, to profit at the expense of the Medicaid program,” said Acting United States Attorney William D. Weinreb.  “Taxpayers rightly expect companies like Mylan that receive payments from taxpayer-funded programs to scrupulously follow the rules.  We will continue to root out fraud and abuse to protect the integrity of Medicaid and ensure a level playing field for pharmaceutical companies. We commend Sanofi for bringing this matter to our attention.”

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

The allegations arose from a lawsuit that claimed Navicent Health violated the False Claims Act and billed Medicare and Medicaid for ambulance trips that were overpriced or not medically necessary.

According to the United States, Navicent Health allegedly upcoded non-emergency hospital-to-hospital ambulance transports as emergency transports in claims submitted to Medicare and Medicaid; upcoded non-emergency ambulance transports from the hospital to patients’ residences, nursing homes, skilled nursing facilities, hospital-based diagnostic clinic, or dialysis clinics as emergency transports; and, submitted claims to Medicare and Medicaid for medically unnecessary ambulance transports of patients from the hospital to patients’ residences, nursing homes, skilled nursing facilities, hospital-based diagnostic clinic, or dialysis clinics.

Reportedly, Navicent Health underwent a 27-month investigation into its billing practices before the United States government decided to intervene.

“Since Navient owned and operated both the hospital and ambulances, profits from the systemic, deceptive practice of falsifying ‘emergency’ trips would fatten the hospital’s bottom line.” stated Derrick L. Jackson, Special Agent in Charge of the Office of Inspector General of the U.S. Department of Health and Human Services.

The Whistleblower, a former Navicent paramedic, Andre Valentine, will receive a share of the settlement payment, as will the federal government and the state. Mr. Valentine, claimed in his 2015 lawsuit, that he was wrongfully terminated in 2014 after he questioned the hospital’s ambulance billing practices.

A settlement has been reached to resolve False Claims Act allegations against PHH Corp, PHH Mortgage Corp, and PHH Home Loans.

The allegations arose from a lawsuit that claimed PHH Corp, PHH Mortgage Corp, and PHH Home Loans knowingly originating and underwriting mortgage loans insured by the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA), guaranteed by the United States Department of Veterans Affairs (VA), and purchased by the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”) that did not meet applicable requirements.

According to the government, as part of the settlement, PHH admitted that between Jan. 1, 2006, and Dec. 31, 2011, it certified for FHA insurance mortgage loans that did not meet HUD underwriting requirements and did not adhere to FHA’s self-reporting requirements. Examples of loan defects that PHH admitted resulted in loans being ineligible for FHA mortgage insurance included: 1) Failing to document the borrowers’ creditworthiness, including paystubs, verification of employment, proper credit reports, and verification of the borrowers’ earnest money deposit and funds to close. 2) Failing to document the borrower’s claimed net equity in a prior residence or obtain documentation showing that the borrower had paid off significant debts. Including these debts in the borrower’s liabilities resulted in the borrower exceeding HUD’s debt-to-income ratio requirements for FHA-insured loans. 3) Insuring a loan for FHA mortgage insurance even though the borrower did not meet HUD’s minimum statutory investment for the loan.

Allegedly, in 2007, PHH audited a targeted sample of government loans for closing or pre-insuring requirements and found that its “percent accurate” did not exceed 50 percent during 2007. Since at least 2006, HUD has required self-reporting of material violations of FHA requirements. However, between Jan. 1, 2006, and Dec. 31, 2011, PHH Home Loans did not self-report any loans to HUD; rather, PHH Home Loans did not self-report any loans to HUD until 2013, after the United States commenced its investigation resulting in this settlement.

Allegedly, as a result of PHH’s conduct and omissions, PHH admitted, HUD insured loans endorsed by PHH that were not eligible for FHA mortgage insurance under the DEL program, and that HUD would not otherwise have insured. It admitted that HUD subsequently incurred substantial losses when it paid insurance claims on those loans.

Additionally, from at least 2005 to 2012, PHH was a VA approved lender, originating and underwriting mortgage loans and obtaining VA loan guarantees. VA home loans are provided by certain pre-approved private lenders, including banks and mortgage companies. By guaranteeing a portion of the loan, the VA enables the lender to provide Servicemembers, Veterans, and eligible surviving spouses with loan terms that are more favorable than would otherwise be available in the marketplace. In order to qualify for a VA guarantee, borrowers must comply with VA loan requirements. The settlement resolves the United States’ claims and potential claims that PHH originated loans that it submitted for guarantee by the VA that did not meet the VA’s requirements.

 Reportedly, from at least 2009 to 2013, PHH also sold mortgage loans to Fannie Mae and Freddie Mac. Congress created the two entities to provide stability and liquidity in the secondary housing market and established the Federal Housing Finance Agency (“FHFA”) to supervise, regulate, and oversee Fannie Mae and Freddie Mac, as well as the Federal Home Loan Bank System. Since 2008, in response to the substantial deterioration in the housing markets that severely damaged Fannie Mae and Freddie Mac’s financial condition, Fannie Mae and Freddie Mac have been operating under a government conservatorship. The settlement resolves the United States’ contentions that PHH originated and sold loans to the Freddie Mac and Fannie Mae that did not meet their requirements. The settlement represents the first resolution of False Claims Acts claims based on false certifications to Fannie Mae and Freddie Mac.

The whistleblower, a former employee of PHH, Mary Bozzelli will receive $9,067,377.33 from the settlements.

PHH has agreed to pay $65 million to resolve the FHA allegations and $9.45 million to resolve the VA and FHFA allegations.

A settlement has been reached to resolve False Claims Act allegations against Wal-Mart Stores Inc.

The allegations arose from a lawsuit that claimed Wal-Mart Stores Inc knowingly submitted claims for reimbursement to California’s Medi‑Cal program that were not supported by applicable diagnosis and documentation requirements.

“These Medi-Cal regulations are essential to protect both patients and limited heath care funding,” said U.S. Attorney Talbert. “My office will continue to hold pharmacies accountable when they fail to comply with regulations like these.”

The settlement resolved allegations that Walmart failed to confirm and document the requisite diagnoses, and in some instances dispensed drugs for non-approved diagnoses, then knowingly billed Medi-Cal for these prescriptions.

Reportedly, the allegations were brought forward by a pharmacist who has worked at Walmart locations in the greater Sacramento area. The whistleblowers' share of the settlement will be approximately $264,000.

Based in Bentonville, Arkansas, Walmart is a multinational retailing corporation that operates as a chain of hypermarkets, discount department stores, and grocery stores.

A settlement has been reached to resolve False Claims Act allegations against Foundations Health Solutions Inc, Olympia Therapy Inc, and Tridia Hospice Care Inc, and their executives, Brian Colleran and Daniel Parker.

The allegations arose from lawsuits that claimed Foundations Health Solutions Inc, Olympia Therapy Inc, and Tridia Hospice Care Inc, and their executives, Brian Colleran and Daniel Parker submitted false claims for medically unnecessary rehabilitation therapy and hospice services to Medicare.

Foundations Health Solutions Inc (FHS) is the corporate successor to Provider Services Inc. (PSI), which provided management services to skilled nursing facilities. In 2010, PSI merged with BCFL Holdings Inc. In 2013, the company was renamed Foundation Health Solutions.

Olympia provided rehabilitation therapy services at skilled nursing facilities that were managed by PSI and BCFL. Tridia provided hospice care services.

Brian Colleran and Daniel Parker are the executives who partially controlled or owned PSI, BCFL, FHS, Olympia, and Tridia at various times between 2008 and 2013.

According to the Justice Department, between 2008 and 2012, Olympia and PSI/BCFL allegedly submitted false claims to Medicare for medically unnecessary rehabilitation therapy services at 18 skilled nursing facilities. A government investigation showed that the rehab was allegedly provided at medically unnecessary levels in order to fraudulently maximize Medicare reimbursement for the services.

Allegedly, between 2011 and 2013, Tridia submitted false claims to Medicare for hospice services provided to patients considered ineligible to receive hospice benefits from Medicare. During this time, Tridia allegedly failed to conduct proper certifications or medical examinations for certain patients, which made them ineligible to receive Medicare hospice benefits.

Allegedly, between January 2008 through December 2012, Colleran and Parker solicited and received kickbacks in return for referring patients from skilled nursing facilities managed by PSI or BCFL to Amber Home Care, a Columbus, Ohio home health care services provider.

Reportedly, FHS and Colleran will enter into a five-year corporate integrity agreement with the HHS Office of Inspector General (HHS-OIG). 

The settlement agreement resolves allegations brought forward by whistleblowers, Vladimir Trakhter, a former Olympia employee, and Paula Bourne and La’Tasha Goodwin, both former employees at Tridia. Vladimir Trahkter will receive approximately a reward of $2.9 million and Paula Bourne and La’Tasha Goodwin together will share approximately $740,000.

“Clinical decisions should be based on patient needs rather than corporate profits,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “This settlement reflects the Department’s continuing commitment to safeguarding patients and the Medicare system.”

A settlement has been reached to resolve False Claims Act allegations against PAMC Ltd and Pacific Alliance Medical Center Inc, which together own and operate Pacific Alliance Medical Center.

The allegations arose from a lawsuit that claimed PAMC Ltd and Pacific Alliance Medical Center Inc engaged in improper financial relationships with referring physicians.

According to the government, the defendants allegedly submitted false claims to the Medicare and MediCal Programs for services rendered to patients referred by physicians with whom the defendants had improper financial relationships. These relationships took the form of (1) arrangements under which the defendants allegedly paid above-market rates to rent office space in physicians’ offices, and (2) marketing arrangements that allegedly provided undue benefit to physicians’ practices.

The lawsuit alleged that those relationships violated the Anti-Kickback Statute and the Stark Law, both of which restrict the financial relationships that hospitals may have with doctors who refer patients to them.

The settlement calls for PAMC and Pacific Alliance Medical Center to pay $31.9 million to the United States and $10 million to the state of California.

Reportedly, Paul Chan, who was employed as a manager by one of the defendants, brought the suit forward.  Chan will receive more than $9.2 million as his share of the federal recovery.

“Federal law prohibits improper financial relationships between hospitals that receive federal health care funds and medical professionals — this is to protect the doctor-patient relationship and to ensure the quality of care provided,” said acting U.S. Attorney Sandra R. Brown. “Patients deserve to know their doctors are making health care decisions based solely on medical need and not for any potential financial benefit.”

With the allegations resolved, the medical center stated that “we look forward to continuing to provide quality, compassionate care to our highly diverse patient population, 95 percent of whom are enrolled in the Medicare and Medi-Cal programs.”