FreshPoint Inc., the largest foodservice distributor of fresh produce in the country, has agreed to pay the government $4.2 million to settle allegations that the company overcharged the U.S. Department of Defense for produce. The settlement, which was announced by the Justice Department last week, resolves allegations that were initially made by a whistleblower, former FreshPoint employee Charles Hall. As part of the settlement, Hall is eligible to receive a reward of almost $800,000 for bringing the alleged fraud to the government’s attention.
FreshPoint, a wholly owned subsidiary of Sysco Corp., was under contract to provide fresh fruit and vegetables to the Department of Defense, which included men and women in the armed forces. Under the terms of this contract, FreshPoint was required to provide produce at cost, plus a pre-established price markup for profit.
Between 2007 and 2009, Hall claims that FreshPoint overcharged the government by randomly including “marketing earned income” or MEI to invoices submitted to the Defense Department. The MEI changes were essentially FreshPoint’s own additional price adjustments based on the perceived market value of the produce, according to the allegations. Inserting MEI was a way of inflating the price of the produce, and a violation of the terms of the contract.
“This settlement demonstrates one of the many types of fraud inflicted upon the American taxpayers,” said Edward Tarver, U.S. Attorney for the Southern District of Georgia. “The U.S. Attorney’s Office will honor our commitment to vigorously enforce the False Claims Act in order to protect the financial soundness of our nation and its military.”
(According to the Los Angeles Times, Charles Hall will receive $798,000 from the settlement. The case is U.S. ex rel. Hall v. SYSCO CORP., et al., Case No: 4:11-CV-57 (S.D.Ga.).)
The Department of Justice announced last week that a hospice services company based in Florida has agreed to pay $3 million to resolve allegations that the company knowingly submitted false claims to Medicare. Hospice of the Comforter, Inc. (HOTCI), which provides hospice services to patients in Orange and Osceola counties in Florida, was accused of billing Medicare for hospice services for patients that were ineligible to receive the services.
Medicare’s hospice program, which is funded by taxpayers, provides care and comfort for terminal patients with less than six months to live. According to a press release issued last week, the Department of Justice claims that between 2005 and 2010, HOTCI told their staff to “admit all referred patients without regard to whether they were eligible for the Medicare hospice benefit.” The staff then changed medical records to make it appear that patients were eligible for hospice services.
Additionally, HOTCI employed field nurses without hospice training and limited the ability of physicians to assess the terminal status of patients over the same five-year period. Lastly, HOTCI allegedly delayed the discharge of patients once they were deemed ineligible to receive care.
“Hospice care is a sacred trust from which no provider should fraudulently profit,” said Inspector General of the U.S. Department of Health and Human Services Daniel R. Levinson. “Claiming tax dollars for people who are not terminally ill and therefore ineligible for hospice care cannot be tolerated.”
In addition to the $3 million, HOTCI will enter into a Corporate Integrity Agreement with the Department of Health and Human Services. The agreement mandates that HOTCI put protocols in place to prevent any conduct similar to the allegations made in this case. Also, HOTCI’s former CEO Robert Wilson agreed to exclude himself from government healthcare programs for three years.
The DOJ’s case was predicated on allegations made by a former HOTCI employee who decided to become a whistleblower after witnessing the company’s CEO verbally instruct employees to admit Medicare patients regardless of their eligibility for hospice services. Douglas Stone, former vice-president of finance at HOTCI, decided to file a qui tam lawsuit against his former employer, and the DOJ intervened in his case in 2012. As part of the settlement, Stone is entitled to a whistleblower reward for bringing the case to the government’s attention. Relators (whistleblowers) typically receive between 15 and 30 percent of the sum recovered in a qui tam case. The percentage depends on the extent to which the relator contributes to the case, and if the government decides to intervene in the case. Stone’s reward has not been made public.
In 2004, Dinesh Thakur, a former executive at one of India’s leading generic drug companies, was asked by his superiors at Ranbaxy to look into allegations of fraud within the company. Thakur discovered that his company had received FDA approval for several drugs based on either fraudulent data or no data at all. “I was dumbfounded,” said Thakur. “I’ve worked in this industry for 11 years at that point and never seen such callous behavior.”
Thakur discovered that his company allowed several drugs prescribed for the treatment of AIDS, heart problems and infections, to be sold even though there was no data to prove that the drugs were effective. He took his findings to his superiors in 2005, but no action was taken. At one point, Thakur’s son had a fever and was prescribed a Ranbaxy antibiotic. The fever would not break, so doctors tried another company’s antibiotic and the fever went away. Thakur knew something needed to be done.
He spoke to the FDA about what he saw at Ranbaxy, and the agency’s subsequent investigation found a “persistent pattern” of submitting false claims. According to CBS News, the investigation revealed that at least 15 of Ranbaxy’s new generic drug applications contained over 1,600 data errors. The agency concluded that Ranbaxy’s drugs were “potentially unsafe and illegal to sell.” Strangely, the FDA only prohibited the drug maker from exporting drugs into the U.S. from two Indian plants. Other plants in India were still allowed to sell drugs in America. This was in 2008; three years after Thakur presented his findings to the FDA. In 2011, an arm of the FDA allowed Ranbaxy exclusive rights to make a generic version of Lipitor, one of the most widely sold drugs of all time. Ranbaxy was given this opportunity at the same time that another arm of the FDA was investigating them for “serious criminal violations.”
In the end, the Ranbaxy investigation resulted in the drug company pleading guilty to seven felony charges, including three counts of violating the federal Food, Drug and Cosmetic Act (FDCA) and four counts of knowingly making false statements to the FDA. The drug maker also agreed to pay $150 million in criminal fines and $350 million to settle civil claims under the False Claims Act and related state laws. As for Thakur, he received a whistleblower reward of nearly $50 million for bringing Ranbaxy’s criminal behavior to light.
U.S. Attorney General Eric Holder announced today that Johnson & Johnson will pay $2.2 billion to resolve criminal and civil allegations concerning the drug maker’s illegal marketing of several prescription drugs. This represents one of the largest health care fraud settlements in U.S. history.
Johnson & Johnson and its Janssen subsidiary were accused of conducting an “aggressive campaign” to market the use of anti-psychotic drugs Risperdal and Invega, along with a heart-failure drug called Natrecor. According to Bloomberg, Janssen allegedly marketed Risperdal off-label, or for uses not approved by the Food and Drug Administration (FDA). Specifically, Janssen was accused of paying kickbacks to doctors in order to entice them to prescribe Risperdal to children, elderly patients and mentally disabled patients. Risperdal is only FDA-approved to treat schizophrenia.
J&J officials were also accused of promoting Invega for off-label uses, making “false and misleading statements about its safety and efficacy.” As for Natrecor, J&J and a subsidiary aggressively marketed the drug for use in patients that didn’t need it. All of these actions, Holder said on Monday, were designed to line Johnson & Johnson’s pockets at the expense of taxpayers and private insurance companies.
“The conduct at issue in this case jeopardized the health and safety of patients and damaged the public trust,” said Holder. “This multibillion-dollar resolution demonstrates the Justice Department’s firm commitment to preventing and combating all forms of health care fraud. And it proves our determination to hold accountable any corporation that breaks the law and enriches its bottom line at the expense of the American people.”
Under the terms of the settlement, Janssen accepts criminal responsibility and will plead guilty to misdemeanor charges. Additionally, Janssen will pay a $334 million fine and forfeit $66 million as part of the settlement. All told, Johnson & Johnson’s profit forfeitures and criminal fines total $485 million, and civil payments to the government total over $1.7 billion.
With this settlement, the Justice Department has recovered nearly $17 billion in claims under the False Claims Act since 2009.
Health care fraud is a serious crime that affects all of us. The National Health Care Anti-Fraud Association estimates that losses incurred by the country due to health care fraud are in the tens of billions of dollars every year. Regardless of your insurance plan, health care fraud leads to higher premiums, higher out-of-pocket expenses and lower quality of care. Sadly these fraud related costs can also mean the difference between someone being able to afford health insurance or not.
The good news is that something can be done to combat health care fraud. It starts with people involved in the health care industry coming forward and holding companies accountable for their misdeeds. If you are a hospice worker, a nursing assistant, physician, or anyone working in health care with intimate knowledge of Medicare or Medicaid fraud, it is vital that you come forward. Those that blow the whistle on fraudulent health care providers are eligible to receive a significant reward if their information leads to a successful case. At the same time, you would be protecting your fellow citizens from rising health care costs and lower standards of care, and discouraging other providers from engaging in similar illegal activities.
A question you might ask is what you should do if you have first-hand knowledge of fraud. The whistleblower law firm of Baum, Hedlund, Aristei & Goldman has these suggestions:
- If you decide to come forward and blow the whistle, do not go to the government first. The DOJ has a very large caseload act acts slowly and deliberately in whistleblower cases. Your information may get lost in the shuffle. Even if the government is successful because of the information you provided, without filing a legal case you will not be eligible for a reward.
- Do not go to the media with your claims. Without filing a legal case first, publication of your inside information could jeopardize a successful prosecution and complicate the chances of you receiving a reward for blowing the whistle.
- If you report fraudulent activity to a government contractor or corporation, filing a whistleblower case can protect you from termination or other forms of retaliation.
A few months ago, the Justice Department filed a lawsuit against Chemed Corporation and their hospice subsidiaries (Vitas Hospice Services LLC and Vitas Healthcare Corporation), alleging that they submitted false claims to Medicare in an effort to steal money from the government. Specifically, the lawsuit claims that Vitas staff members were encouraged to increase crisis care claims to Medicare, even in cases where the care provided was significantly less than what was billed for. The company allegedly distributed bonuses to employees that successfully enrolled patients for hospice care and similarly took action against those that did not meet hospice admission quotas.
This is just one recent example of health care providers cheating taxpayers and government health care systems. It is particularly difficult for honest employees who are being pressured into unethical, dishonest or illegal behavior in order to keep their jobs.
If you have insider knowledge of a government contractor or private company committing fraud against the government, contact the whistleblower attorneys at Baum, Hedlund, Aristei & Goldman. Building a case against those engaged in health care fraud is the right thing to do and is one of the most effective ways to prevent these crimes from happening. It may also result in you receiving a significant financial reward and protect you from retaliation.
If you knew that your doctor was profiting from implanting a medical device in you during a surgery, would you still go through with it? Would you be skeptical of the surgery? Would you be skeptical of your doctor? According to the results of a new government study, it turns out that this scenario of a physician profiting from a medical device used in a surgery is not an uncommon one.
A “physician-owned distributorship” or “POD” might not be a phrase you hear very often, but they are deeply entrenched in the business of health care. A POD is an entity that recruits implanting surgeons to be “investors” in the devices they implant in their patients, essentially acting as an intermediary between the medical device maker and the hospital. A surgeon stocks the shelves at the hospital with a particular device, and in return for marketing and using the device on patients, the surgeon is then compensated with some of the profits from that sale.
PODs have been on the radar of the Office of the Inspector General for years and rightfully so, as critics have often said PODS provide no benefits from a cost standpoint or from a quality of care standpoint. The government’s study found that significantly more surgeries are being performed in hospitals that purchase devices from PODs. For example, the rate of spinal surgery in hospitals that purchased devices from PODs grew three times faster than in other hospitals, and hospitals that purchased devices from PODs performed 28 percent more surgeries. Additionally, the study found that implants purchased by PODs cost the same or more than devices from companies without physician investors.
“My deep-seated skepticism that physician-owned distributors operate in the best interest of patients and save taxpayers money has been confirmed,” said Senator Oren Hatch (R-UT), senior Republican on the Senate Finance Committee. The results of the study come at the same time that the Justice Department is investigating Reliance Medical Systems, a network of PODs embroiled in public scandal. Over the summer, the Wall Street Journal reported that a California surgeon in the Reliance Medical Systems network used implants from a POD in which he was an owner. The Justice Department is currently investigating whether this caused the surgeon to perform operations that were not medically necessary.
Hopefully this study and the Justice Department’s ongoing investigation will do something to combat what seems to be a dangerous conflict of interest and a possible violation of federal law. If you have knowledge of a surgeon using implants in which they have a financial interest to perform medically unnecessary surgeries, contact a whistleblower attorney today to discuss your case. Filing a qui tam case may be the right thing to do and could result in a significant reward from the government.