Healthcare Fraud

A settlement has been reached to resolve False Claims Act allegations against AMI Monitoring Inc, also known as Spectocor, its owner, Joseph Bogdan, Medi-Lynx Cardiac Monitoring LLC, and Medicalgorithmics SA, the current majority owner of Medi-Lynx Cardiac Monitoring LLC.

The allegations arose from a lawsuit that claimed AMI Monitoring Inc, aka Spectocor, Joseph Bogdan, Medi-Lynx Cardiac Monitoring LLC, and Medicalgorithmics SA billed Medicare for higher and more expensive levels of cardiac monitoring services than requested by the ordering physicians.

According to the government, from 2011 through 2016, Spectocor, headquartered in McKinney, Texas, and Joseph Bogdan, allegedly marketed the Pocket ECG as capable of performing three separate types of cardiac monitoring services—holter, event, and telemetry. When a physician sought to enroll a patient for Pocket ECG, however, the enrollment process allegedly only allowed the physician to enroll in Pocket ECG for the service which provided the highest rate of reimbursement provided by a patient’s insurance, thus steering the ordering physician to a more costly level of service. In 2013, Medi-Lynx, a related company headquartered in Plano, Texas, began selling the Pocket ECG and allegedly adopted this same enrollment procedure. Medicalgorithmics SA, a limited liability company based in Warsaw, Poland, acquired a controlling interest in Medi-Lynx in September 2016.

“Billing for unneeded services, as the government alleged, takes unfair advantage of Medicare patients and steals from taxpayers,” said Special Agent in Charge Scott J. Lampert for the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “OIG, along with our law enforcement partners, will aggressively investigate these crimes.”

Under the agreement, Spectocor and Bogdan will pay $10.56 million and Medi-Lynx and Medicalgorithmics will pay $2.89 million.

The whistleblower, Eben Steele, former Spector sales manager who blew the whistle on the companies, will receive about $2.4 million from the settlements.

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

The allegations arose from a lawsuit that claimed Linde AG's Lincare unit fraudulently billed the U.S. government for oxygen and respiratory care equipment.

According to the government, Lincare allegedly billed government health programs, including Medicare, since 2003 for oxygen equipment and tanks even when the customers did not use or require them, fabricated customer oxygen orders and improperly waived customer co-payments and deductibles.

Furthermore, allegedly the company paid kickbacks to physicians and their families for patient referrals and supplying them with oxygen and supplies for free.

Reportedly, the case was filed by former employees, which began as two separate lawsuits, one filed in 2009 by two former Lincare employees, SallyJo Robins and Kathleen Dunlap, and another in 2010 by Germano Lima and Roberto Rabassa.

As part of the settlement, the US government will receive $9 million and the former employees will receive $11 million.

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

The allegations arose from a lawsuit that claimed Freedom Health Inc violated the False Claims Act by engaging in illegal schemes to maximize their payment from the government in connection with their Medicare Advantage plans.

According to the government, allegedly Freedom Health submitted or caused others to submit unsupported diagnosis codes to CMS, which resulted in inflated reimbursements from 2008 to 2013 in connection with two of their Medicare Advantage plans operating in Florida. Furthermore, allegedly Freedom Health made material misrepresentations to CMS regarding the scope and content of its network of providers (physicians, specialists and hospitals) in its application to CMS in 2008 to expand in 2009 into new counties in Florida and in other states. 

Reportedly, the former Chief Operating Officer of Freedom Health, Siddhartha Pagidipati, has agreed to pay $750,000 to resolve his alleged role in one of these schemes.

“When entering into agreements with managed care providers, the government requests information from those providers to ensure that patients are afforded the appropriate level of care,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Today’s result sends a clear message to the managed care industry that the United States will hold managed care plan providers responsible when they fail to provide truthful information.”

These allegations were brought forward by whistleblower, Dr. Sewell, who died in 2014, who worked at Freedom Health and Optimum Healthcare from 2007 to 2012 as chief medical officer before transferring to the Medicare Revenue Management Department as vice president of special projects.

Based in Tampa, Florida, Freedom Health Inc is a provider of managed care services.

A settlement has been reached to resolve False Claims Act allegations against Fredericksburg Hospitalist Group, P.C.

The allegations arose from a lawsuit that claimed Fredericksburg Hospitalist Group P.C. knowingly and intentionally upcoded evaluation and management (E&M) codes to the highest code levels in billing Medicare and other federal healthcare payors in connection with their providing hospitalist services to patients at Mary Washington Hospital and Stafford Hospital.

According to the government, allegedly from January 2010 through April 2015, Fredericksburg Hospitalist Group P.C. knowingly and intentionally increased the level of E&M codes to the highest code levels, resulting in increased reimbursement amounts paid by the federal healthcare payors to the billing defendants.

“Rooting out fraudulent billing by healthcare providers is a priority,” said Dana J. Boente, U.S. Attorney for the Eastern District of Virginia. “This office will continue to pursue such matters vigorously.”

The whistleblower could be awarded approximately 25 percent, or more, of amounts collected.

Fredericksburg Hospitalist Group, P.C. is a Medical Group that has only one practice medical office located in Fredericksburg VA. There are 31 health care providers, specializing in Internal Medicine, Family Practice, Hospitalist, Osteopathic Manipulative Medicine, Nurse Practitioner, Physician Assistant, being reported as members of the medical group.

A settlement has been reached to resolve False Claims Act allegations against companies and facilities acquired Genesis Healthcare Inc.

The allegations arose from a lawsuit that claimed Genesis Healthcare Inc had billed for medically unnecessary therapy and hospice services, and “grossly substandard” nursing care.

According to the Justice Department, Genesis Healthcare Inc will pay the federal government $53,639,288.04, including interest, to settle six federal lawsuits and investigations.

 “We are committed to protecting the federal health care programs and the patients who are enrolled in them,” said U.S. Attorney Brian J. Stretch. “We will continue to vigorously pursue companies and individuals who provide care that is grossly deficient or unnecessary.”

Reportedly, this settlement resolves four sets of allegations. First, the settlement resolves allegations involving Skilled Healthcare Group, Inc. (SKG) and its subsidiaries (collectively, the Skilled Companies).  Allegedly, from 2010 through March of 2013, Genesis subsidiary Skilled Healthcare Group Inc. (SKG) and its subsidiaries submitted false claims by (1) billing for hospice services for patients who were not terminally ill and (2) billing inappropriately for certain physician evaluation management services at the SKG Creekside Hospice facility in Las Vegas. In addition, Genesis settled claims that from 2005 through 2013, SKG and its subsidiaries submitted false claims at certain facilities by providing therapy to certain patients longer than medically necessary, and/or billing for more therapy minutes than the patients actually received. This set of claims also included allegations that the SKG subsidiaries assigned patients a higher Resource Utilization Group (RUG) level than necessary. Genesis did not acquire SKG and its related entities until after all of the conduct at issue had occurred.

This settlement also allegedly resolves claims regarding Genesis subsidiaries Sun Healthcare Group Inc., SunDance Rehabilitation Agency Inc., and SunDance Rehabilitation Corp. Specifically, the settlement resolves allegations that from 2008 through September of 2013, those entities billed for outpatient therapy services provided in the State of Georgia that were (1) not medically necessary or (2) unskilled in nature.

Lastly, this settlement allegedly resolves allegations that between 2003 and 2010, Genesis subsidiary, Skilled LLC, submitted claims at certain of its nursing homes for services that were grossly substandard and/or worthless and therefore ineligible for payment. At the heart of the claims of worthless services were allegations that the nursing homes at issue did not provide sufficient nurse staffing to meet residents’ needs.

The whistleblowers, who were former employees of the companies acquired by Genesis, will receive a combined $9.67 million as their share of the recovery.

Based in Kennett Square, Pennsylvania, Genesis owns and operates through its subsidiaries skilled nursing facilities, assisted/senior living facilities, and a rehabilitation therapy business.  

Union Treatment Center will pay $3 million to resolve allegations the provider defrauded the federal workers' compensation program, known as FECA.

According to the Department of Justice, as part of the settlement, Union Treatment Centers will also waive claims for payment exceeding $1.6 million and be permanently excluded from participating in federal health care programs.

 “Today’s settlement reflects our commitment to combatting fraud in the federal health care system,” said U.S. Attorney Richard L. Durbin, Jr. “We will use all of the tools at our disposal, including civil litigation under the False Claims Act, to ensure the integrity of federally funded programs.”

Allegedly, the government claimed that UTC, its former CEO Garry Craighead and former CFO Christine Craighead devised and executed a scheme to overcharge U.S. Department of Labor, Office of Workers’ Compensation Programs (“OWCP”) for services and supplies allegedly rendered to patients covered by the FECA program. Allegedly, between January 1, 2009, and December 31, 2012, the government stated in its complaint that UTC fraudulently billed the FECA program for services never actually rendered; regularly overcharged for medical examinations and lied about the time patients spent in therapy. Furthermore, the complaint alleged UTC billed for services and supplies that were not needed, and offered, payed, sought and received kickbacks in exchange for patient referrals.

Reportedly, the allegations were part of a whistleblower lawsuit, and despite the settlement there has been no actual admission of liability. Garry Craighead is currently serving a 14-year term of imprisonment as a result of his guilty plea to kickback and money laundering charges. He was ordered to pay OWCP nearly $18 million in restitution for damage he caused the FECA program. Christine Craighead is awaiting trial on conspiracy, wire fraud, kickback, and aggravated identity theft charges and her trial is set for October 30, 2017.

A settlement has been reached to resolve False Claims Act allegations against eClinicalWorks (ECW).

The allegations arose from a lawsuit that claimed eClinicalWorks (ECW) misrepresented the capabilities of its software. Reportedly, this settlement also resolves allegations that eClinicalWorks (ECW) paid kickbacks to certain customers in exchange for promoting its product.

Under the Electronic Health Records Incentive Program to encourage healthcare providers to adopt and demonstrate "meaningful use" of EHR certified technology, the U.S. Department of Health and Human Services (HHS) offers incentive payments to healthcare providers that adopt EHRs and meet certain requirements regarding their use. EHR vendors obtain certification for their products by attesting that the products satisfy specific criteria adopted by HHS and pass testing by an HHS-approved certifying entity.

According to the government, eClinicalWorks (ECW) falsely obtained that certification for its EHR software when it concealed from its certifying entity that its software did not comply with the requirements for certification. For example, in order to pass certification testing without meeting the certification criteria for standardized drug codes, the company modified its software by “hardcoding” only the drug codes required for testing. In other words, rather than programming the capability to retrieve any drug code from a complete database, ECW simply typed the 16 codes necessary for certification testing directly into its software. ECW’s software also did not accurately record user actions in an audit log and in certain situations did not reliably record diagnostic imaging orders or perform drug interaction checks. In addition, ECW’s software failed to satisfy data portability requirements intended to permit healthcare providers to transfer patient data from ECW’s software to the software of other vendors. As a result of these and other deficiencies in its software, ECW caused the submission of false claims for federal incentive payments based on the use of ECW’s software.

As part of the settlement agreement, eClinicalWorks (ECW) and three of its founders are jointly and severally liable for the payment of $154.92 million to the United States. Separately, a company Developer will pay $50,000, and two company Project Managers will pay $15,000 each.

The whistleblowers' share of the settlement will be approximately $30 million.

A settlement has been reached to resolve False Claims Act allegations against two Southwest Missouri health care providers.

The allegations arose from a lawsuit that claimed Mercy Hospital Springfield and Mercy Clinic Springfield Communities, engaged in improper financial relationships with referring physicians.

According to the U.S. Justice Department, allegedly the Defendants submitted false claims to Medicare for chemotherapy services rendered to patients referred by oncologists whose compensation was based, in part, on a formula that improperly took into account the value of their referrals to an infusion center operated by Mercy.

“When physicians are rewarded financially for referring patients to hospitals or other health care providers, it can affect their medical judgment, resulting in overutilization of services that drives up health care costs for everyone,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.  “In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable.”

Reportedly, the whistleblower, Dr. Viran Roger Holden, a physician who was employed by one of the Defendants, will receive $5,440,000 from the recovery.

As part of the settlement, the health system did not admit wrongdoing. In a statement issued by Jon Swope, a regional Mercy executive, stated, "we take this situation very seriously."

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

The allegations arose from a lawsuit that claimed Omnicare Inc submitted false claims for payment for drugs under the Medicare Part D and Medicaid programs from 2008 to 2014.

According to the government, Omnicare allegedly in an effort to increase business efficiency and profit, designed and implemented an automated label verification system at certain locations that used less specific drug codes than the National Drug Code that identifies the labeler, product and trade package size. The use of less specific drug codes resulted in Omnicare submitting claims to Medicare and Medicaid for generic drugs that were not actually dispensed to beneficiaries

Furthermore, the government alleged, the drugs being dispensed with patient-specific labels displayed an incorrect product identifier, affecting Omnicare's ability to conduct recalls.

“Ensuring accuracy in the dispensing of and billing for medication in the Medicare Part D and Medicaid Programs, especially to long-term care patients, is vital to public safety,” Acting U.S. Attorney Fitzpatrick said.

Reportedly, the whistleblowers, former Omnicare pharmacists, Elizabeth Corsi and Christopher Ezzie, will receive more than $2 million as their share of the recovery and to resolve employment claims.

A settlement has been reached to resolve False Claims Act allegations against five hospice companies.

The allegations arose from a lawsuit that claimed International Tutoring Services LLC, formerly known as International Tutoring Services Inc and doing business as Hospice Plus; Goodwin Hospice LLC; Phoenix Hospice LP; Hospice Plus LP; and Curo Health Services LLC, formerly known as Curo Health Services Inc, agreed to settle the case that claimed the companies violated the False Claims Act by paying kickbacks in exchange for patient referrals

Reportedly, these allegations were brought forward by several whistleblowers claiming that two different schemes allowed the hospice companies to file false claims to Medicare and Texas Medicaid.

According to the Department of Justice, first alleged scheme was from 2007 through 2012, kickbacks were allegedly paid to American Physician Housecalls, a physician housecall company, in exchange for patient referrals to these hospice companies. The alleged kickbacks took the form of sham loans, a free equity interest in another entity, stock dividends, and free rental space. Second, from 2007 through 2014, kickbacks were allegedly paid to medical providers, including doctors and nurses as well as hospitals and long-term care facilities, in exchange for patient referrals to these hospice companies. The alleged kickbacks took the form of cash, gift cards, and other valuable items.

“We will not tolerate the payment of illegal kickbacks, which unjustly drive up the cost of health care,” said U.S. Attorney Parker. “Any health care provider who seeks to profit illegally at the expense of federal beneficiaries and taxpayers will face consequences.”

Both cases were filed as qui tam cases in Dallas, Texas, permitting private individuals to sue on behalf of the government for false claims and to share in any recovery.