Category Archives: Medicare 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.)


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.”


Medical Business Service, Inc. to Pay $1.95 Million to Settle Health Care Fraud Charges

The Justice Department announced last week that a Florida-based radiology billing company will pay nearly $2 million to settle claims that it knowingly changed billing codes to Medicare and Medicaid in order to get previously rejected claims paid out. The settlement resolves a whistleblower claim filed by relator, Katlisa N. Vaughn, who will receive a share of the recoveries for her role in exposing the fraud.

usa-dollar-bills-1431130-mMedicare and Medicaid have guidelines stating that neither will pay for certain procedure s that are provided to patients with specific diagnoses. In an effort to avoid these restrictions, Vaughn claims that Medical Business Service, Inc. changed the codes for claims that Medicare and Medicaid had previously rejected. The alleged fraud took place between 2008 and 2010.

According to the FBI, the federal government will receive $1.917 million, with the states of Texas, New York, Florida and Georgia splitting much of the remaining portion. Vaughn will also receive a whistleblower reward, though the amount has not yet been revealed.

Since 2009, the Justice Department has recovered over $20 billion from False Claims Act cases. This case demonstrates the need for whistleblowers to come forward and expose health care fraud. If you have information concerning health care fraud at your place of work, it is in your best interest to contact an experienced whistleblower attorney to discuss your case. If your information leads to the successful recovery of government funds, you may be entitled to compensation.

Caremark to Pay $6 Million to Settle Whistleblower Allegations

downloadThe pharmacy benefit management company (PBM) operated by CVS Caremark Corporation will pay $6 million to settle whistleblower allegations of fraud. Whistleblower Donald Well, a former manager at Caremark LLC, accused his former employer of knowingly failing to reimburse Medicaid for prescription drug costs paid on behalf of “dual eligible” Medicaid beneficiaries.

A person is considered “dual eligible” when they are covered by both Medicaid and a private insurer. Under federal law, private insurers assume the cost of health care for dual eligibles, not Medicaid. In the event that Medicaid pays for the prescription claim of a dual eligible, Medicaid is entitled to seek reimbursement from either the private insurer or its PBM, which administers and manages prescription drug benefits under a private insurer’s health plan.

According to Well, Caremark’s billing platform improperly deducted co-pays and deductible amounts when calculating prescription drug payments for dual eligibles. The lawsuit claims that this caused Medicaid to pay for prescription drug costs for dual eligibles when Caremark should have been footing the bill.

Well discovered the billing irregularities when performing an audit on Medicaid claims. He worked at Caremark between 2001 and 2006. According to the Justice Department, Well will receive a little over $1 million plus interest for his role in exposing the fraud.

Owner of X-Ray Company to Pay $7.5 Million in Forfeiture For Role in Health Care Fraud Scheme

sThe owner of an X-ray company has been accused of bilking over $7.5 million from government health care agencies. Rafael Chikvashvili, the 67-year-old owner of Alpha Diagnostics, allegedly overbilled Medicare and Medicaid by submitting false claims for services that were not performed by licensed doctors, among other illegal activities.

According to a federal indictment unsealed today, Chikvashvili had employees who were not licensed physicians interpret X-rays, cardiology exams, ultrasounds and other medical tests instead of paying a licensed physician to provide those services. Chikvashvili also directed those under his employment to create fake doctor examination reports and forge doctor signatures. If a report was questioned, Chikvashvili would use a licensed physician to interpret the medical test without explaining that his company had already provided the service.

In addition to these allegations, Chikvashvili and Alpha Diagnostics have been accused of exaggerating work performed by technicians in claims for Medicare and Medicaid reimbursement, as well as overcharging for transportation costs, performing unnecessary services and lying about a physician supervising the company. Chikvashvili, who holds a doctorate in mathematics, allegedly had employees lie to make people believe he was a medical doctor.

If Chikvashvili is convicted, he could face a 10-year prison sentence for health care fraud, as well as five years for each count of making false statements and a mandatory two years for two counts of aggravated identity theft. The government is also seeking $7.5 million in forfeited assets, according to the Baltimore Sun.

Owner of Miami Health Care Company Gets 75 Months Jail Time for Role in Medicare Fraud Scheme

usa-dollar-bills-1431130-mThe owner of a Miami home health care company was sentenced to 75 months behind bars for her role in a Medicare fraud scheme worth over $6.5 million. The Justice Department announced the sentencing of 64-year-old Cruz Sonia Collado in a press release issued Monday. In addition to prison time, Collado will serve three years of supervised release and pay $6,536,657 in restitution.

Collado owned and operated the now-defunct Nestor’s Health Services Inc., which purportedly provided home health care and physical therapy services to patients receiving Medicare benefits. According to the DOJ, Collado doled out kickbacks to patient recruiters in exchange for the recruiters referring patients to Nestor’s Health Services. Patients that were supposed to be receiving home health care or physical therapy services were either never provided the services or the services were considered medically unnecessary, according to court documents.

This didn’t stop Collado from billing Medicare for the illegitimate services. Between 2009 and 2014, Nestor’s Health Services submitted over $6.5 million in Medicare reimbursement claims. Medicare paid out $6.1 million of that total.

Collado pleaded guilty in June to one count of conspiracy to offer and pay health care kickbacks and one count of offering and paying health care kickbacks.

California Nursing Homes Accused of ‘Severely Overmedicating’ Patients

iStock_000009293508SmallTwo northern California nursing homes, owned by Arba Group, are the subjects of a False Claims lawsuit that claims they “severely overmedicated” their patients, causing injuries and death. The two homes allegedly received over $20 million in Medicare and Medicaid reimbursements between 2007 and 2012. During this time, the both homes allegedly overmedicated their patients in order to ease their workload.

The lawsuit cites numerous instances in which patients at Country Villa Watsonville East Nursing Center (now called Watsonville Nursing Center) and Country Villa Watsonville West Nursing and Rehabilitation Center (now called Watsonville Post-Acute Center) were harmed by overused medications such as antidepressants, antipsychotics and painkillers.

In 2009, one of the nursing facilities allegedly administered a double dose of Xanax, an anti-anxiety drug, and ordered two new antipsychotics for an 86-year-old man that had recently been admitted the facility. Eight days later, the man was in an emergency room with symptoms of heart failure. Doctors said he had an infected bed sore, a blood infection and was suffering from malnutrition and dehydration.

The same year, a 101-year-old woman was given a drug cocktail shortly after being admitted consisting of antidepressants Paxil and Trazodone, an antipsychotic called Zyprexa, a sedative called Ativan and painkiller morphine. Two days later, the woman lost consciousness, fell and died.

According to the complaint, medication costs at these facilities were in the tens of thousands of dollars per patient. In addition to Arba, the lawsuit names Country Villa Health Service Corp., which acted as a management consultant for the two Watsonville nursing facilities. Arba has filed a cross-complaint against Country Villa, alleging that the management consultant made false statements concerning how the nursing facilities were run during the time the alleged fraud took place.

Former Owner of Los Angeles Medical Clinic Management Company Pleads Guilty to $3.2 Million Health Care Fraud Scheme

usa-dollar-bills-1431130-mThe former owner of a Los Angeles area medical clinic management company entered a guilty plea today for his role in a Medicare fraud scheme worth $3.2 million. Mihran “Mike” Meguerian pleaded guilty to one count of conspiracy to commit health care fraud before U.S. District Judge Beverly R. O’Connell of the Central District of California.

Meguerian owned Med Serve Management, a Van Nuys-based medical clinic management company. The 37-year-old Glendale resident admitted to being involved in a health care fraud scheme between 2008 and 2009 that involved writing prescriptions for power wheelchairs and other durable medical equipment (DME) that were not medically necessary. Meguerian and fellow conspirators sold the phony prescriptions to DME companies, which then submitted false claims to Medicare. In total, DME companies that purchased phony prescriptions from Med Serve submitted $3,367,661 in false claims. Of that total, Medicare paid out $1,438,760.

According to the Justice Department, Meguerian’s sentencing is scheduled for November. The case was investigated by the Federal Bureau of Investigation and was brought as part of the Medicare Fraud Strike Force, which is now operating in nine U.S. cities and has charged nearly 2,000 defendants since 2007.

HHS Investigation: Medicare Spent Over $30 Million on Suspicious AIDS Medication Costs

downloadThe U.S. Department of Health and Human Services (HHS) says that Medicare spent over $30 million in 2012 on possibly dubious AIDS medication costs. The HHS investigation flagged 1,578 Medicare beneficiaries that questionably received AIDS medications. More than half of those flagged had never received an HIV diagnosis, had not visited labs to monitor the use of the prescribed medications, or received medical services from any of the prescribers.

The report highlights the lax oversight of Medicare Part D – which cost taxpayers $65 billion in 2013 – and the billions wasted on needlessly dispensed drugs.

Below are some of the most egregious instances of AIDS medication Medicare fraud cited in the investigation:

  • A fraudster in Miami visited nearly 30 different pharmacies to fill prescriptions of HIV drugs. Sixteen different health care practitioners wrote the scripts. The amount of drugs dispensed was roughly 10 times what the average patient gets in a year and worth nearly $200,000.
  • One patient received $17,500 worth of AIDS medication in one day then did not fill a single prescription for the same medication for the rest of the year. The patient was prescribed double the recommended dose of five HIV drug ingredients.
  • A 77-year-old Detroit woman reportedly filled prescriptions for 10 different AIDS medications worth $33,500. No official record exists of the woman having HIV or visiting the doctors that prescribed the meds.
  • Two Miami pharmacies filled prescriptions for HIV medications to 321 Medicare beneficiaries, collecting over $350,000 for the meds. Most of the prescriptions were for women around the age of 74, who are more than two decades older than the average HIV patient receiving meds through Medicare.

The issue of AIDS medication exploitation extends beyond pharmacies and doctors, though the report is quick to highlight that, occasionally, fraudulent pharmacies will bill for AIDS meds, not dispense them, then bill a second time for them. Patients themselves are also abusing the system, as the report noted, because some of the AIDS meds have psychoactive effects that can enhance the effect of certain painkillers.

“These patterns may indicate that a beneficiary is receiving inappropriate drugs and diverting them for sale on the black market,” the report states. “They may also indicate that a pharmacy is billing for drugs that a beneficiary never received, or that a beneficiary’s identification number was stolen.”

The report highlights the need for whistleblowers to step up and report fraud if they see it, especially among practitioners and pharmacies. Blowing the whistle on egregious fraud like this saves taxpayer money and could provide you with a generous financial reward. If you have seen instances of overbilling for prescriptions or billing for drugs that were never dispensed, you should contact an experienced whistleblower attorney to discuss the matter.

Dallas Doctor Faces 20 Years in Prison for Health Care Fraud

A Dallas doctor and hospital chain operator is facing 20 years in prison for stealing roughly $18 million from government health care agencies. Dr. Tariq Mahmood was found guilty today of eight counts of health care fraud, including conspiracy, and seven counts of aggravated identity fraud.

ambulance-1334534-mSeveral of Dr. Mahmood’s employees at Renaissance Hospital Terrell testified that Mahmood regularly insisted on upcoding services in order to obtain higher reimbursements from Medicare. Upcoding is a fraudulent practice where a health care provider assigns a code for services that is worth more money than the service actually provided.

Norma Longley, a coder for Mahmood’s hospital chain, testified that she noticed her Medicare reimbursement codes had been altered at another of Mahmood’s facilities after she had refused to follow his upcode orders. Government auditors began informing Longley that her Medicare billings were “riddled with mistakes,” according to the Dallas News.

Another coder claimed that she was fired for refusing to obey Mahmood’s upcoding orders. In many cases, Dr. Mahmood actually billed for services on patients “he had never seen,” according to his indictment.

Dr. Mahmood’s case received attention at the national level after a government panel said the case “raises broader questions about CMS’ ability to detect fraud in its programs.” Put simply, this case demonstrates why we need whistleblowers; maybe now more than ever. If you have been asked to upcode or have witnessed health care fraud on any level, you should seek the advice of an experienced whistleblower attorney to help you navigate your best course of action.