Category Archives: Healthcare Fraud

With Rising Fraud in the Industry, Home Healthcare Sees Increased Scrutiny

For the last five years, the government has been working to stop fraud in the home healthcare industry. Crackdown efforts recently led to a Dallas doctor being charged for his role in running a $374 million fraud scheme in which his company certified over 11,000 patients for home healthcare services that they didn’t need. Dr. Jacques Roy has pleaded not guilty and is currently awaiting trial. Several of his co-conspirators have pled guilty charges.

iStock_000009293508SmallUnfortunately, this is only one example of an enormous problem with home health care fraud across the country. According to an Office of Inspector General study, one in every four home healthcare agencies had questionable billings in 2010, and roughly half of the Justice Department’s current healthcare fraud cases involve home healthcare agencies.

Experts can trace the growing fraud back to the state of Florida eliminating a requirement that forced home care agencies to get certified before opening for business. With limited barriers to entry, the state saw an explosion in the number of home care agencies, which led to a surge in companies billing Medicare at unusually high rates.

According to Modern Healthcare, the most common allegations of fraud in the industry stem from companies billing Medicare for services that are either never provided or are considered medically unnecessary. Paying kickbacks to patient recruiters is also very common in the industry.

The government created the Health Care Fraud Prevention and Enforcement Action Team (HEAT) in 2009 to combat growing health care. HEAT now operates in nine U.S. cities and has been responsible for several high-level fraud busts in Miami and Detroit that returned hundreds of millions to the government. It should also be said that the industry itself has also taken steps to prevent fraud. Industry trade associations have worked to curtail the number of agencies popping up across the country, and have asked the government to cap the percentage of revenue a company can receive in Medicare outlier payments.


Sanofi Named in Lawsuit Claiming Tens of Millions Spent on Kickbacks

A whistleblower lawsuit claims that the recently removed CEO of Sanofi and other high-level executives conspired in a scheme to funnel millions of dollars in company money to doctors, hospitals and pharmacy chains as kickbacks to get them to purchase and prescribe a Sanofi diabetes medication. The lawsuit was filed by Diane Ponte, a former Sanofi employee who was allegedly ousted from her job as retaliation for discovering the fraud scheme.

sanofi_niouAccording to Ponte, pharmaceutical giant Sanofi used contracts that appeared to be legitimate as the means to pay kickbacks to health care professionals and pharmacies. Her lawsuit further claims that around $1 billion of company money is still missing and unaccounted for.

Ponte discovered the alleged fraud when she was asked to approve nine Sanofi contracts – seven with consulting firm Accenture and two with Deloitte, a professional services firm – worth $34 million. These contracts had actually already been executed four months prior, leading Ponte to conclude that the money was for “illegal incentives” or kickbacks designed to get Accenture and Deloitte to influence prescribers and purchasers to switch to Sanofi drugs over those of competitors. She further claims that former Sanofi CEO Christopher Viehbacher and other executives “conspired to and/or caused” employees to approve these contracts without first receiving approval from the company’s accounting, purchasing or legal departments.

When Ponte reported the alleged fraud to her superiors, an internal investigation corroborated her findings. Two of the executives she claimed were covering up the kickbacks “retired” from the company in 2013, receiving millions in severance. One of the two actually became a high-paid employee at Accenture. After speaking with her superiors, she claims to have endured a hostile working environment before her superiors created a pretext for her termination from the company.

This lawsuit comes only two years removed from another lawsuit against Sanofi involving kickbacks, which settled for $109 million. The company was supposed to enter into a corporate integrity agreement with the Department of Health and Human Services (HHS) following the settlement, compelling them to report any illegalities on the part of the company and its employees. But according to CNBC, the agreement still has not been executed.


The Largest Health Care Fraud Settlements in 2014

usa-dollar-bills-1431130-mEarlier this week, we profiled some of the Justice Department’s largest mortgage fraud settlements from 2014, including the largest civil settlement from a single entity (Bank of America agreed to pay a record $16.65 billion under a global resolution). In addition to recoveries in the financial sector, DOJ was able to successfully recover roughly $2.3 billion in health care fraud cases, largely due to the help of health care whistleblowers.

The year saw two massive cases settle involving Johnson & Johnson and Omnicare. Both cases accounted for a substantial portion of the total recovered in 2014.

  • Johnson & Johnson – $1.1 Billion: J&J and a couple of subsidiaries agreed to pay $1.1 billion to resolve claims that they promoted several drugs for off label use. J&J allegedly promoted Risperdal, Natrecor and Invega for uses not deemed safe by the U.S. Food and Drug Administration by paying kickbacks to physicians in exchange for writing off-label prescriptions. This caused health care providers to submit hundreds of millions in alleged false claims for reimbursement through government health care agencies. In addition to the $1.1 billion to the federal government, J&J paid over $600 million to state Medicaid programs and $485 million in criminal fines and forfeitures. The settlement, one of the largest in the nation’s history, could not have been possible without the brave men and women who blew the whistle on the pharmaceutical giant. One particular whistleblower from Northern California received $28 million for filing suit against J&J.
  • Omnicare – $116 Million: Omnicare agreed to settlement terms with the DOJ after the nation’s largest provider of pharmaceuticals to nursing homes was accused of paying kickbacks to entice nursing homes into choosing Omnicare as their pharmacy provider. The allegations were in violation of the Anti-Kickback Statute, which prohibits companies from offering, soliciting, paying or receiving payment to induce referrals for goods or services covered by government health care agencies. Omnicare paid an additional $8.2 million to state Medicaid programs that were affected by the alleged fraud. Much like the J&J case, this case was assisted by multiple whistleblowers who came forward and helped the government build a case against Omnicare. One of the whistleblowers, a former Omnicare employee, walked away with $17.24 million for his role in exposing the alleged fraud.


Biotronik Agrees to Pay $4.9 Million to Resolve Whistleblower Lawsuit

The Justice Department announced late last week that an Oregon-based biotech company will pay nearly $5 million to settle whistleblower claims filed by a former employee. Biotronik allegedly made improper payments to doctors in an effort to entice them to use medical devices that the company manufactured and sold.

Logo_BIOTRONIKThe alleged improper payments caused hospitals and ambulatory surgery centers to submit false claims to both Medicaid and Medicare for the implantation of Biotronik products, specifically defibrillators, pacemakers and cardiac resynchronization devices. According to the Justice Department, Biotronik paid physicians in Arizona and Nevada in the form of meals at expensive restaurants or inflated payments for membership on a physician advisory board.

Brian Sant, a former Biotronik employee, initially filed the allegations in a qui tam lawsuit. The government decided to intervene and take over Sant’s case. Still, he is entitled to compensation for his role in the successful recovery and will receive approximately $840,000.

The lawsuit is United States ex rel. Sant v. Biotronik, Inc., No. 2:09-CV-03617 KJM EFB (E.D. Cal.)


New York Nursing Service Agrees to Pay $35 Million to Settle Fraud Claims

logo.vnsnyA New York nursing service accused of sending improper reimbursement claims to the state’s Medicaid program will pay $35 million to settle civil fraud charges. Visiting Nursing Service of New York, VNS Choice and VNS Choice Community Care (collectively VNS) allegedly enrolled roughly 1,740 Medicaid members into a managed long-term care plan when the needs of these patients did not qualify them for the care plan. In spite of their ineligibility, VNS passed the bills for caring for these patients onto New York’s Medicaid program.

Health care providers like VNS are responsible for managing long-term care services for Medicaid members, for which they are paid roughly $3,800 per month, per each member enrolled in the health plan. In order to qualify for a managed long-term health plan, Medicaid members must be eligible for nursing home level of care, and require at least 120 days of community-based long-term care.

VNS admitted that 1,740 patients were improperly referred to them by social adult day care centers (known as SADCC’s). None of the patients were eligible for the managed long-term health plan. In some cases, these patients received care primarily through the SADCC’s, many of which provided minimal or substandard care.

According to the U.S. Attorney’s Office for the Southern District of New York, the SADCC’s merely served as “a conduit” for VNS to induce the enrollment of more Medicaid members. In addition to the $35 million payment, VNS will be required to credential only with SADCCs that have been properly certified and are capable of providing levels of care consistent with regulatory requirements, monitor SADCCs in network to ensure compliance and prohibit improper marketing practices.


Owner and Operator of Florida Home Health Care Companies Sentenced to 80 Months Behind Bars, Will Pay $45 Million in Restitution

The Miami-based owner and administrator of two home health care companies was sentenced to 80 months in prison today and will pay $45 million in restitution after pleading guilty to one count of conspiracy to commit health care fraud. Elsa Ruiz, the 45-year-old owner of Professional Home Health Care Solutions Inc. and administrator of LTC Professional Consultants Inc., pleaded guilty in July for her role in a Medicare fraud scheme worth $74 million.

1314902_medical_doctorBoth of Ruiz’s companies purported to provide home health care and therapy services to Medicare beneficiaries. According to the Justice Department, Ruiz and others involved in the scheme fraudulently billed Medicare between 2006 and 2012 for expensive physical therapy and home care services that were not medically necessary or never provided. According to her own testimony, Ruiz negotiated and paid out kickbacks to patient recruiters in exchange for patient referrals, prescriptions, plans of care and certifications for physical therapy and home care services that were not medically necessary. During the time when both companies were fraudulently billing Medicare, the government paid out approximately $45 million.

Individuals who file a False Claims complaint and report fraud schemes like this to the United States may be entitled to a reward of up to 25% of any money that the government recovers. It’s an opportunity to be rewarded for doing what’s right. Anyone thinking about reporting fraud to the government should consult with an attorney experienced in this area of law.

Ocean Dental Pays $5 Million to Settle Medicaid Fraud Claims

An Oklahoma-based dental company has agreed to pay $5.05 million to resolve a lawsuit claiming it submitted false Medicaid claims. Ocean Dental, which operates 28 dental clinics in seven states, provides dental services to children eligible for Medicaid. The company agreed to the settlement without admitting any wrongdoing, however, a former Ocean Dental employee named in the lawsuit was sentenced to prison time after pleading guilty to health care fraud charges.

511af1fae241eAccording to News OK, Ocean Dental employee Robin Lockwood allegedly submitted false claims to Oklahoma’s Medicaid program between 2005 and 2010 for dental work that was either never provided or billed at a higher rate than the state allows. After pleading guilty in 2012, Lockwood was sentenced to 18 months in prison. She was released in April and will pay $375,000 in restitution.

After the settlement was announced, Ocean Dental released a statement saying that the allegations were centered on an employee (Lockwood) who had not worked at the company since 2010. The company added that it was “glad to get the matter resolved.”

The Ocean Dental case demonstrates that healthcare fraud, specifically Medicaid fraud, extends into the field of dentistry. Dentists are no different than other healthcare practitioners in that they are susceptible to the same kinds of fraud that regularly catch headlines, including:

  • Billing for services never provided
  • Misrepresenting services provided
  • Waiving deductibles or copayments in an effort to build or retain patients
  • Overcharging or upcoding for services
  • Providing unnecessary or incorrect treatments that bring in more money

Former General Counsel for Minnesota Hospital Association Offered $150k as ‘Hush Money’ to Stay Silent on Healthcare Fraud

In 2010, David Feinwachs was asked to look into what he describes as a lack of transparency and accountability in Minnesota’s Medicaid program. As general counsel for the Minnesota Hospital Association, Feinwach found that certain hospitals were being reimbursed well below their costs while four HMOs were making an astounding amount of money off the state’s Medicaid program.

ambulance-1334534-mAs he learned more, the figures struck Feinwachs as nearly impossible, leading him to conclude that fraud must somehow be involved. His suspicions were legitimized when, later in 2010, he was on a conference call in which a woman with the Department of Human Services admitted that the state was “playing with the books,” in effect bilking federal dollars.

After the call, Feinwachs went to his boss and said that what he heard was not only inappropriate, it was Medicaid fraud. Shortly thereafter, he was put on administrative leave and ultimately fired for insubordination.

Here’s where the story takes a weird turn: not long after he was terminated, Feinwachs was offered $30,000 in exchange for signing a severance agreement saying he wouldn’t speak about the Medicaid fraud to anyone. He refused. Three weeks later, he was again approached, this time by the person who fired him. Feinwachs was this time offered $150,000. He again refused, but this time took action by filing a lawsuit against the HMOs.

At the beginning of 2011, one of the four HMOs made a strange admission. UCare told the state that it was refunding $30 million, describing the sum as a donation because Minnesota was in the middle of a budget crisis. But UCare also sent a letter to the committees in charge of oversight for HMOs and the state Medicaid program, saying they were giving back the money because they were paid at an inflated rate.

According to Feinwachs, this admission, “together with the statement on the conference call, virtually cemented the notion that this was fraudulent.” In spite of this, Feinwachs lost his lawsuit against the HMOs. Still, he believes he continues to fight the good fight by lobbying his issue at the state capitol. “If you are within the system, you play the game,” Feinwachs told the Corporate Crime Reporter. At some point, every once in a while, somebody decides – enough is enough. If nothing else, I’d like to be remembered as the guy who didn’t take the money and spoke out.”


Dialysis Services Company Settles Illegal Kickback Allegations for $350 Million

One of the nation’s leading dialysis services companies will pay $350 million to resolve claims that it paid illegal kickbacks to physicians and physician groups in an effort to boost patient referrals. The Justice Department announced today that it had reached the settlement agreement with DaVita Healthcare Partners, Inc., which has dialysis clinics in 46 states and Washington D.C.

davitalogonew_300The settlement resolves claims initially filed by whistleblower David Barbetta, who worked for DaVita as a Senior Financial Analyst in the company’s Mergers and Acquisitions Department. Mr. Barbetta will receive a share of the settlement amount, though the exact portion has not yet been determined.

The government claims that between March 2005 and February 2014, DaVita identified physicians and physician groups with large renal disease patient populations and offered them partnership interests in DaVita’s dialysis clinics in return for referring patients. DaVita used a three-prong approach in perpetrating this alleged fraud:

  • DaVita would identify physicians or a physician group they considered a “winning practice” in a specific area. A “winning practice” could mean that the physicians were young and in debt, leading DaVita to assume that most, if not all of the physicians’ patients would be referred to DaVita clinics.
  • Once DaVita targeted a practice, they would offer them a lucrative opportunity to enter into a joint venture in which DaVita would either acquire an interest in a dialysis center owned by the practice, or DaVita would sell interest in one of its dialysis centers to the practice. In some cases, the Justice Department maintains that DaVita was able to manipulate the value of clinics it was selling interest in, which allowed the practice DaVita partnered with to realize exceedingly high returns, all but ensuring that the practices would refer patients to DaVita.
  • DaVita paid doctors they partnered with to serve as medical directors on the joint venture clinics. DaVita also used non-compete agreements with all of the practices it partnered with, ensuring that the practices could not send business to competing dialysis clinics.

As part of the settlement, DaVita agreed to a $39 million civil forfeiture based on two specific joint ventures in Denver, Colorado. The company has also entered into a Corporate Integrity Agreement with the Office of the Inspector General, which requires some business arrangements to be changed or restructured.


Glaxo Investigating Corruption Allegations in the United Arab Emirates

gsk-logoPharmaceutical giant GlaxoSmithKline (GSK) announced on Monday that they are looking into allegations of corruption in the United Arab Emirates. The announcement comes roughly a month after the drugmaker was hit with a $489 million fine for corruption charges in China.

Reuters got wind of the corruption allegations through an anonymous email purportedly sent by a Glaxo sales manager in the UAE. The whistleblower claims that GSK made improper payments to hospitals, clinics, pharmacies and healthcare providers in an effort to get more business. The improper payments were made in the form of educational meetings – some of which may or may not have actually occurred – and schemes that paid customers for using GSK products by giving them extra over-the-counter products.

A GSK spokesman told the media that the British drugmaker is conducting its own internal investigation into the matter. GSK is currently under investigation for similar allegations in a number of other countries in the Middle East.

These investigations come at a time when American and British authorities are making a push to stop overseas corruption by international companies. French drugmaker, Sanofi, said the company has informed American officials of corruption allegations of its own in East Africa and the Middle East. Novartis, a Swiss company, is also facing kickback accusations in the U.S.