Category Archives: Healthcare Fraud

Quest Diagnostics Whistleblower Receives Reward for Exposing Alleged Fraud

The last few days have seen several companies resolve fraud allegations, resulting in millions of dollars being returned to the government. Three of these cases involve major corporations that have found themselves in this position before. Lockheed Martin has paid millions in fines and penalties stemming from whistleblower lawsuits or fraud allegations every year since 2012. Quest Diagnostics settled a whistleblower lawsuit in 2011 for over $240 million. Amgen paid $762 million in 2012.

Apparently the adage that crime doesn’t pay doesn’t apply to these companies. Instead, it demonstrates how much they make from fraud, since these enormous penalties are merely treated as the cost of doing business. As the penalties get larger and larger, however, whistleblower lawsuits will gradually change things for the better by holding even the largest corporations accountable.

Quest Diagnostics to Pay $1.79 Million to Settle Whistleblower Allegations of Health Care Fraud

Quest DiagnosticsQuest Diagnostics Inc. is an international leader in laboratory testing with headquarters in New Jersey. Quest Diagnostics claims to have the largest clinical testing network in the U.S. and reported that its 2014 annual revenue topped $7 billion.

But this isn’t to say that Quest Diagnostics hasn’t been the subject of government scrutiny. In 2009, the company paid over $300 million to resolve whistleblower allegations that it marketed and sold misbranded lab test kits. Quest Diagnostics allegedly knew that these kits were faulty, but the company continued to market and sell them even though they caused lab results to be materially inaccurate and unreliable.

In 2011, Quest Diagnostics was the subject of another whistleblower lawsuit that claimed the company overcharged Medi-Cal, California’s healthcare program for the poor. The whistleblower lawsuit claimed that Quest Diagnostics charged Medi-Cal up to six times more for laboratory testing than it charged other customers, a violation of the California False Claims Act.

This brings us up to today’s Quest Diagnostics whistleblower news…

On August 25, Quest Diagnostics agreed to settle allegations brought forth by yet another whistleblower claiming the company performed duplicate laboratory testing, and then billed Medicare for the repeated procedure. The testing that Quest Diagnostics performed included procedures like blood draws and panel testing.

This whistleblower lawsuit was filed four years ago by a former Quest Diagnostics employee who claimed that she witnessed the alleged fraud while working in the company’s patient service centers. Whistleblower Eliza Martinez claims that Quest Diagnostics was performing tests on the same patients twice in the same day. The company would then submit requests for Medicare reimbursement based on performing two tests instead of only the one necessary test.

According to several news sources, Martinez will receive a whistleblower reward of $358,000 for her role in exposing the lab testing company’s alleged health care fraud.

Unit of Lockheed Martin Settles False Claims Allegations for $4.7 Million

Lockheed MartinLockheed Martin is one of the country’s largest benefactors of defense contracts, with a great majority of its revenue generated from military sales. Just like Quest Diagnostics, Lockheed has frequently been the subject of whistleblower lawsuits and allegations of defense contractor fraud.

These allegations could fill an entire article themselves, here are some of the most recent Lockheed Martin fraud claims:

–    In 2012, Lockheed paid $15.8 million to resolve claims that a subcontractor overcharged the company for perishable tools used to work on planes. Lockheed then passed on this cost to the government.

–    In 2013, the defense contractor settled a securities fraud lawsuit claiming the company lied to investors about the prospects for its information technology division. Lockheed paid nearly $20 million to settle the allegations.

–    In December of 2014, Lockheed paid $27.5 million to resolve allegations that one of its subsidiaries violated the False Claims Act by overcharging the government for work performed by employees that lacked required job qualifications.

Last week, the news media reported that Lockheed agreed to pay $4,790,042 to resolve allegations that a subsidiary (Sandia Corporation) violated the False Claims Act and the Byrd Amendment by appropriating federal funds for lobbying purposes. Sandia allegedly used government money in an effort to renew a Management and Operating (M&O) contract with the Department of Energy’s National Nuclear Security Administration (NNSA).

For over 20 years, Congress has allocated funding for Sandia National Laboratories, a government-owned laboratory operated by Sandia as part of the NNSA’s nuclear weapons complex. According to the Justice Department, Sandia allegedly used federal funding between 2008 and 2012 to lobby Congress and other government officials to obtain a noncompetitive extension on its NNSA contract. The Byrd Amendment prohibits the use of government money for lobbying purposes.

Department of Energy Inspector General Gregory H. Friedman said he applauded the Justice Department’s work last week, saying in a statement that the use of public funds for lobbying is “simply unacceptable.”

Amgen Settles State Attorney General Fraud Charges for $71 Million

diversity-ssrp-amgen_logoAmgen claims on its website that it is the world’s largest independent biopharmaceutical company. The company generated over $20 billion in revenue in 2014, largely on the backs of a several key products.

Two of these products—Aranesp and Enbrel—have been the subject of a number of fraud allegations, specifically dealing with how Amgen marketed both drugs. Aranesp is an anemia drug that increases red blood cell counts. Enbrel is a drug used to treat a number of conditions, including rheumatoid arthritis and other autoimmune disorders.

These drugs were the centerpiece of a 2012 whistleblower lawsuit that claimed Amgen engaged in off label marketing of both Aranesp and Enbrel, all while paying kickbacks and engaging in price gauging. Whistleblower Jill Osiecki, a former Amgen employee, wore a wire more than a dozen times in an effort to expose the alleged fraud.

Basically, the allegations claimed that Amgen sales associates marketed Aranesp to physicians as a treatment option for cancer patients that weren’t undergoing chemotherapy. The drug was not approved by the FDA for this purpose. To make matters worse, a study later showed that the use of Aranesp by non-chemo patients actually increased their chance of death.

Other drugs mentioned in the whistleblower claims were Enbrel, Epogen, Neulasta, Neupogen, and Sensipar. The case ended up settling for $762 million.

Osiecki told the news media she didn’t believe the fraud allegations were a mistake…in fact, these people knew exactly what they were doing. She had this to say about her experience watching what went down at Amgen:

“The Amgen people who engaged in these criminal activities were no less mindful they were engaging in illegal behavior than muggers or bank robbers. They were smart, mature adults, who made conscious decisions to disobey the law to personally profit from highly incentivized pay, bonuses, awards, and international travel.”

Despite putting patient health in danger and striking a criminal plea deal that cost the company hundreds of millions of dollars, not one person at Amgen went to jail. No one paid a personal fine. Nonetheless, you might think that a drug manufacturer hit with such a huge settlement might stay on the straight and narrow. You’d be wrong.

Various news agencies reported last week that Amgen agreed to pay $71 million to settle fraud allegations connected with the illegal marketing of (surprise, surprise) Aranesp and Enbrel. The agreement settles claims brought by Massachusetts Attorney General Maura Healey and 48 attorneys general who say Amgen violated state consumer protection laws by promoting Aranesp for the treatment of anemia among cancer patients even though the application hasn’t been approved by the FDA. Additionally, Amgen allegedly promoted Enbrel for mild plaque psoriasis even though the drug has only been approved by the FDA to treat chronic moderate to severe plaque psoriasis.

As is standard in these settlement agreements, Amgen didn’t admit to any wrongdoing. Aside from the $71 million, Amgen agreed to reform its promotion and marketing practices. Not very likely!

AstraZeneca and Cephalon Will Pay Combined $54 Million to Settle Whistleblower Allegations

AstraZeneca and Cephalon (now owned by Teva Pharmaceuticals) have agreed to settle whistleblower claims that both knowingly underpaid rebates under the Medicaid Drug Rebate Program, which resulted in the government being overcharged for drugs. Both companies will pay a combined $54 million to settle the allegations initially brought in a 2008 whistleblower lawsuit filed by pharmacist and attorney Ronald Streck, who used to head a trade group for pharmaceutical wholesalers. Streck will receive a whistleblower reward for bringing the allegations to the government’s attention, though the amount has not yet been determined.

M_Id_473905_AstraZenecaIn order for their drugs to be covered under the Medicaid Drug Rebate Program, drug manufacturers are required to pay rebates every quarter to state Medicaid programs. The rebates are, in part, based on the average manufacturer prices (AMPs) reported to the government for each drug. Typically, a drug with a higher reported AMP amounts to a greater rebate to state Medicaid programs.

In his qui tam lawsuit, Streck claimed that AstraZeneca and Cephalon developed a scheme to underreport AMPs for a number of their drugs by improperly reducing the reported AMPs for service fees that both paid to wholesalers. Essentially, the lawsuit claims that both drug makers treated fees to pharmaceuticals wholesalers as price reductions when tabulating AMPs for their drugs. As a result of this deception, AstraZeneca and Cephalon allegedly underpaid rebates owed to the states, which in turn caused the government to be overcharged for payments to the states under the Medicaid Drug Rebate Program.

Settlement Terms

  • AstraZeneca: $46.5 million—Of that total, AstraZeneca will pay roughly $26.7 million, plus interest, to the federal government, and the remainder will go to states that participated in the settlement. The following AstraZeneca drugs were named in the whistleblower lawsuit: Crestor (cholesterol medication) and Seroquel (an antipsychotic).
  • Cephalon: $7.5 million—Of that total, Cephalon will pay roughly $4.3 million, plus interest, to the federal government, and the remainder will go to states that participated in the settlement. The following Cephalon drugs were named in the whistleblower lawsuit: Provigil (wakefulness, for people with uncontrollable sleepiness) and Actiq (pain management for cancer patients).

Community Health Network Agrees to Settle Medicare Fraud Lawsuit for $20.3 Million

Federal prosecutors announced yesterday that Community Health Network has agreed to pay $20.3 million to settle allegations that the health care provider had for years submitted false claims for Medicare and Medicaid reimbursement. Community Health operates seven hospitals in Indianapolis and has dozens of other medical facilities scattered throughout Central Indiana.

chn_vert_colorAccording to Assistant U.S. Attorney Shelese Woods, the settlement is related to contracts that Community Health had previously entered into with local ambulatory surgery centers not owned by the provider. The cost of performing surgeries at these centers was allegedly cheaper than the cost of performing the same surgeries at a Community Health hospital. The difference in price for the procedures could range from small (around $200) to quite substantial ($2,000).

The government contends that Community Health doctors would refer patients to surgery centers in an effort to cut costs. At the same time, Community Health allegedly submitted bills to Medicare and Medicaid claiming the surgeries had been performed at a Community Health hospital when, in fact, they were performed at the cheaper surgery centers. These alleged false claims resulted in the government overpaying for the surgeries.

Woods told the media that she believes Community Health had actually been engaging in the fraud laid out in the allegations since the late 1990’s, but the statute of limitations on health care fraud prevented the allegations from going back that far. Community Health purportedly stopped submitting bills in this manner in 2009. According to the Indianapolis Star, the provider no longer  has contracts with surgery centers.

The government notified hospitals back in November of 2007 that submitting reimbursement bills to Medicare for outside procedures and falsely claiming they were done in-house was not allowed. According to Woods, the damages from Community Health’s alleged scheme after this notice had been sent out totaled $9.35 million.

New Attorney General Focuses her Attention on Medicare/Medicaid Fraud

The Department of Justice, in a nationwide sweep of Medicaid/Medicare cheaters, charged 243 people today with crimes related to their alleged involvement in health care fraud schemes that generated over $712 million in false billings. Attorney General Loretta E. Lynch and Department of Health and Human Services (HHS) Secretary Sylvia Mathews Burwell announced the nationwide sweep, led by the Medicare Fraud Strike Force, which was the largest takedown in the history of the Strike Force, both in terms of defendants charged and amount in fraudulent billings.

dept_justiceRevealing a possible change in policy, those indicted included forty-six physicians and other healthcare providers. In addition to the criminal charges, the Centers for Medicare & Medicaid Services (CMS) also suspended a number of providers from participating in government health care programs, cutting off their source of funding.

According to the Justice Department, the sweep caught doctors, patient recruiters, home health care providers, pharmacy owners, and a host of others. The defendants have been accused of various crimes, including money laundering, violations of anti-kickback statutes, aggravated identity theft and conspiracy to commit health care fraud.

The scams allegedly involved fraudulent billing for treatments ranging from psychotherapy to home health care. Those who participated in the scams allegedly submitted claims to Medicare and Medicaid for equipment that wasn’t provided, treatments that weren’t medically necessary and services that were never rendered.

During her speech today, Lynch described one example of a medical professional charged in the sweep:

A Michigan doctor allegedly prescribed narcotic pain medications to patients who didn’t need them. When the physician obtained the patients’ personal data, they billed additional charges as if the patient was obtaining the needed medications and services. If a patient tried to withdraw from the scheme, the doctor allegedly threatened to stop giving them the pain medications to which they had become addicted.

In Miami, Florida, 73 defendants were charged for their alleged involvement in schemes that accounted for over $263 million in false billings. In one example, the administrators of a Miami mental health center submitted nearly $64 million in billings between 2006 and 2012 for purported intensive mental health treatment to Medicare beneficiaries. The administrators allegedly paid kickbacks to patient recruiters and assisted living facility owners throughout the South Florida area.

The whistleblower law firm of Baum, Hedlund, Aristei & Goldman applauds the government’s effort in bringing these alleged criminals to justice. Many people depend on our nation’s health care system, especially those living through their most vulnerable moments. Health care fraud takes valuable resources from the sick and the suffering, and our firm is determined to help whistleblowers expose schemes that steal from State and Federal health care programs.


Former Chief Financial Officer at Georgia Hospital Receives Whistleblower Reward for Role in Exposing Kickback Scheme

It’s not every day that you hear about a hospital executive filing a qui tam claim against their former employer. Ralph D. Williams, the former chief financial officer of Walton Regional Medical Center in Monroe, Georgia, did just that and will receive a whistleblower reward of roughly $120,000 for his role in exposing a kickback scheme.

WRMC_logoBIGThe Department of Justice announced today that Health Management Associates (HMA) and Clearview Regional Medical Center (formerly Walton Regional) have agreed to pay $595,155 to settle Williams’s whistleblower claims that the hospital paid kickbacks to Hispanic Medical Management (DBA Clinica de la Mama) between 2008 and 2009. Clinica de la Mama is an obstetric clinic that primarily serves undocumented Hispanic women. HMA owned Walter Regional during the time of the allegations.

In return for the kickbacks, the hospital would receive patient referrals from Clinic de la Mama for labor and delivery at Walton Regional. The hospital would then submit false claims to the state Medicaid program of Georgia. According to the complaint, the kickbacks were disguised as payments for a variety of services purportedly provided by Clinica de la Mama.

In addition to the $595,155, HMA and Clearview will pay an additional $396,770 to settle the state of Georgia’s claims under the Georgia False Medicaid Claims Act. Undocumented immigrants are not eligible to receive Medicaid coverage, though the program does provide coverage for certain emergency situations, such as childbirth.

When hospitals pay kickbacks to solicit referrals for undocumented pregnant patients, it takes advantage of vulnerable women and compromises the integrity of taxpayer-funded programs like Medicaid. The whistleblower law firm of Baum, Hedlund, Aristei & Goldman applauds Mr. Williams for coming forward and bringing these allegations to the government’s attention.

South Florida Doctor Facing Criminal Charges Over Medicare Advantage Fraud Allegations

A criminal case against a south Florida doctor is taking aim at the Medicare Advantage industry. Isaac Kojo Anakwah Thompson, a doctor affiliated withstethoscope-942045-m—one of the largest providers of private Medicare Advantage plans in the country—was indicted in February on eight counts of health care fraud. Thompson allegedly claimed that his patients were sicker than they actually were, allowing him to overbill the government for medically unnecessary care. In total, he’s accused of bilking over $2 million from Medicare.

Medicare Advantage is different than standard Medicare, which pays doctors in accordance with each service they provide. In contrast, Medicare Advantage plans are offered by private companies and based on a set monthly fee for each patient. Each patient’s fee is based on a complex formula known as a risk score. Generally speaking, the government pays higher rates for sicker patients and lower rates for those in good health.

According to the Center for Public Integrity, Medicare Advantage overcharges have cost taxpayers billions of dollars over the last few years. In the face of these overcharges, whether intentional or not, the Obama administration has proposed $36 billion to be cut from Medicare Advantage plans over the next decade. As expected, the industry has mounted a massive campaign in D.C. to stop government attempts to reduce Medicare Advantage funding.

At present there are several ongoing whistleblower lawsuits involving Medicare Advantage fraud allegations:

  • Florida doctor Olivia Graves claims that a Humana medical center knowingly misdiagnosed patients to seem in poorer health than they actually were, all in the name of overbilling the government.
  • A whistleblower lawsuit claims that a California company abused the diagnosis process to inflate risk scores.
  • A former official in the Bush administration has accused a provider in Puerto Rico of overbilling Medicare hundreds of millions by misdiagnosing patients.

All of the above companies have denied any wrongdoing.

While it is important that companies be held accountable for any wrongdoing, it is unlikely that civil settlements alone will have the desired impact. But bringing criminal charges that carry a maximum jail sentence of up to 10 years ups the ante dramatically for health care fraudsters. Hopefully this will carry a message—if you steal from the government, you will face jail time.

New York Doctors Stand Accused of Using Homeless People to Defraud Medicaid

“At the heart of this health care fraud scheme was the exploitation of poor people.” — Kenneth P. Thompson, Brooklyn D.A.

Nine doctors were among 23 people that were indicted on Tuesday for their roles in a scheme that used homeless people as a means to defraud New York’s Medicaid program for millions of dollars. According to the Brooklyn District Attorney’s Office, the scheme prayed on thousands of homeless people in New York City and made over $7 million in the process.

1314902_medical_doctorIn 2012, a woman walked into the Brooklyn D.A.’s office saying she had been recruited to visit a clinic where she received a knee brace and a pair of shoes. When she told employees at the clinic that she didn’t require a brace, they informed her that she would need to take the knee brace in order to keep the new shoes. Something wasn’t right…

So began an investigation into 43-year-old Eric Vainer and his operation.

According to the New York Times, Vanier sent recruiters out to places where New York City’s homeless population gathered, namely shelters, soup kitchens and welfare offices in Jamaica, Queens, and Brooklyn. Recruiters would check to see if homeless people had valid Medicaid cards. If they did, they were sent to clinics in Brooklyn and the Bronx.

When a patient arrived at one of these clinics, they would typically be seen by a podiatrist that would give a false diagnosis, then order tests and expensive equipment like leg braces or orthotics that were unnecessary. The podiatrist would then send the patient to other doctors affiliated with the scheme, like psychiatrists, cardiologists, vein specialists and pain-management specialists that would set up appointments, tests and reviews that they could bill for. Some of the doctors in the scheme paid Vanier a referral fee, others would split the money generated from the Medicaid reimbursements.

After going through this lengthy process, patients would get to pick a pair of shoes from a clinic storeroom that, in at least one example cited by the Times, resembled a shoe store.

Vanier made money in several ways: He owns the clinics where patients were sent; supplied the supplies and devices that were billed to Medicaid; and made financial agreements with doctors that were sent the homeless patients he recruited.

Most of those indicted on Tuesday entered the State Supreme Court handcuffed together in small groups. The defendants were ordered to be held on bail for between $10,000 and $350,000. Vainer was arrested in Florida, where he was vacationing.


Florida Home Health Care Company to Pay $1.1 Million to Resolve Whistleblower Allegations

Recovery Home Care and National Home Care Holdings will pay the government $1.1 million to resolve claims that Recovery Home Care paid doctors for home health care patient referrals. Recovery Home Care, which provided home health care services to Medicare beneficiaries, was purchased by National Home Care in 2012. The alleged fraud occurred prior to the sale.

The settlement resolves allegations initially filed by whistleblower Gregory Simony, a former Recovery Home Care employee. The government decided to intervene in Simony’s qui tam lawsuit, and for his courage to come forward, he will receive a whistleblower reward totaling nearly $200,000.

logo13According to Simony’s claims, West Palm Beach, Florida-based Recovery Home Care allegedly paid thousands of dollars to dozens of doctors between 2009 and 2012. Recovery Home Care made the payments under the guise of patient chart reviews, but in reality the money was used to induce doctors into referring patients to Recovery Home Care, a violation of both the Anti-Kickback Statute and the Stark Law.

The Anti-Kickback Statute and the Stark Law are intended to prevent a doctor’s judgment from being compromised by improper financial incentives. The Anti-Kickback Statute prevents offering, paying, soliciting or receiving remuneration in exchange for referrals of services or items that are covered by government health care agencies. The Stark Law prohibits a home health care provider from billing Medicare for services referred by a doctor with whom the provider has a financial relationship.

The settlement resolves claims against Recovery Home Care, but not that of its former owner, Mark Conklin. The Justice Department is still litigating against Conklin for his role in the scheme.

It’s a shame that companies like Recovery Home Care feel like they can break the law at the expense of government health care agencies and taxpayers. Thankfully, there are people out there like Mr. Simony who are willing to expose wrongdoing by blowing the whistle on fraud.

New York Doctor Pleads Guilty over Involvement in $14 Million Fraud Scheme

A 40-year-old New York doctor pleaded guilty today to one charge of conspiracy to commit health care fraud before U.S. Magistrate Judge Marilyn D. Go of the Eastern District of New York. Roman Johnson, a former Buffalo resident, admitted that he and several others were involved in a scheme that submitted false claims for about $14.2 million.

According to a Justice Department press release issued today, Johnson and his co conspirators submitted claims to Medicare for unnecessary physical therapy sessions, vitamin infusions and occupational therapy that did not qualify for Medicare reimbursement. As part of his plea, Johnson has agreed to pay just over $5 million in restitution to Medicare – the amount that the government actually paid out on Johnson’s fraudulent claims. Sentencing has been set for a later date.

stethoscope-942045-mThe case against Johnson was investigated by the Federal Medicare Fraud Strike Force. Operating in nine cities throughout the country, the Medicare Fraud Strike Force has charged almost 2,100 defendants that collectively billed Medicare for over $6.5 billion since 2007. The Strike Force has been a valuable weapon in the fight against healthcare fraud, but with estimates ranging from 3 to 10 percent of taxpayer money wasted on Medicare fraud and abuse every year, more needs to be done to stop it.

It may come as a surprise to you that Congress has been working on a bi-partisan bill designed to address this very issue. H.R. 1021, otherwise known as the Protecting the Integrity of Medicare Act, takes dead aim at fraud by increasing education, transparency and communication between Medicare payers and providers. While no one can say with certainty how much the bill will save taxpayers by reducing fraud and abuse, the National Coalition on Health Care, which supports the bill, said H.R. 1021 has the tools that could make a $60 billion difference. At this time, there is no companion bill in the U.S. Senate.

Medtronic Settles Whistleblower Lawsuit for $2.8 Million

The Justice Department announced last Friday that medical device maker Medtronic Inc. has agreed to pay $2.8 million to resolve whistleblower claims that the company submitted false claims to government health care agencies for services that were not approved by the Food and Drug Administration (FDA). The lawsuit was filed by former Medtronic sales representative Jason Nickell, who will receive a share of the settlement totaling $602,000 for his role in bringing the alleged fraud to the government’s attention.

medtronicAccording to Nickell, Minnesota-based Medtronic knowingly submitted false claims to Medicare and TRICARE for an investigational medical procedure called SubQ stimulation, which is not eligible for reimbursement. SubQ stimulation uses Medtronic spinal cord devices that are designed to electronically stimulate an area of pain. The devices are placed under the skin, most commonly in the lower back area. Once inserted, they emit an electrical impulse, which creates a tingling sensation that is supposed to help relieve chronic pain.

The lawsuit contends that Medtronic promoted SubQ stimulation in 20 states even though the safety and effectiveness of the service had not been established by the FDA. Among many strategies, Medtronic arranged for doctor-customers to take part in “on-site training programs” sponsored by Medtronic, where participants would be shown how to use the company’s spinal cord stimulation devices for SubQ stimulation procedures.

Nickell was paid over $600,000 a year selling Medtronic neuromodulation devices to hospitals around the country. He says sales representatives were asked to promote off-label SubQ procedures using Medtronic devices to physicians by telling them they could make “upward of $10,000” per patient in a procedure that lasts only a few minutes. Sales reps were also encouraged to tell physicians to use a Medicare billing code associated with an FDA-approved product, even though the procedures were not FDA-approved.

In a statement issued on Friday, Medtronic denied any wrongdoing in the case.