Healthcare and Pharma Cases

Whistleblower reports are getting more rampant in the country, showing the increased incidence of fraudulent and criminal activity by some of the biggest organizations. For example, in Florida, the University of Miami was recently forced to fork out millions in fines after a whistleblower accused the educational institution of Medicare fraud.

According to an official case document from the Department of Justice (DOJ), a former senior executive at the school had raised an alarm over Medicare fraud occurring in its healthcare system. The executive had pointed out that the university’s healthcare system had engaged in three practices that violated the False Claims Act.

The False Claims Act is one of the strongest whistleblower laws in the United States. It is also the country’s first whistleblower law, being signed into law in 1863 by President Lincoln. Under the law, whistleblowers can be rewarded for disclosing fraud that results in financial losses to the federal government in a confidential manner.

Provided that the whistleblower’s information results in a prosecution, the whistleblower is awarded a reward between 15 and 30 percent of the proceeds collected....

In what is becoming more of a trend, another healthcare institution has agreed to settle a claim of defrauding the national Medicare program.

Late last month, the Department of Justice (DOJ) confirmed in a press release that it had reached a settlement agreement with SavaSeniorCare LLC - a nursing home operator based out of Atlanta, Georgia.

As explained, SavaSeniorCare LLC is a nursing home operator. The company runs several senior nursing homes, many of which have branches in the state and other surrounding states. According to the DOJ press release, the organization and several of its affiliates had been billing Medicare for several unnecessary therapy services.

Fraud to Promote the Bottom Line

The claim against SavaSeniorCare primarily stems from violating the False Claims Act (FCA) - one of the oldest - and the most powerful - of the whistleblower protection laws in the country. Under the FCA, whistleblowers will be eligible to report cases of fraudulent acts by organizations or companies in the country - especially those which result in loss of money on the part of the federal government.

If the investigation and prosecution lead to a conviction, the whistleblower is eligible for 15 to 30 percent of the proceeds collected. Since the criminal is usually liable for civil penalties and damages under the FCA, rewards can be substantial....

Kaiser Foundation Health Plan’s Washington subsidiary (formerly Group Health Cooperative) has agreed to pay $6,375,000 to resolve allegations that it claimed patients were sicker than they were and billed a government health program for nonexistent conditions.

Based in Seattle, Group Health Cooperative (GHC) was founded in 1947 and has been often characterized as a respected nonprofit health insurance plan. Kaiser Permanente acquired the company in 2015.

GHC allegedly defrauded Medicare Advantage (MA) in an attempt to reverse financial losses endured between 2008 and 2010 due to “poor business decisions by company management.”...

On September 9, the U.S. Department of Justice announced that Wheeling Hospital in West Virginia had agreed to pay $50 million to settle allegations of an unlawful physician kickback scheme that took advantage of vulnerable patients. A former executive, fired for raising concerns that the scheme violated the Physician Self-Referral (Stark) Law and the Anti-Kickback Statute, filed a qui tam lawsuit under the False Claims Act and will receive a $10 million reward.

Fired whistleblower confronts former employers

During the dates in question, 2007 to 2020, Wheeling Hospital was under the direction and control of R&V Associates, Ltd., headed by Ronald Violi. At this time, Wheeling had a policy of paying compensation to physicians that were “above fair market value” and/or “based on the volume or value of the physicians’ referrals.”

When Louis Longo, who was an Executive Vice President at the hospital, voiced opposition to the plan, Mr. Violi fired him. Mr. Longo then filed a qui tam lawsuit under the federal False Claims Act, suing on behalf of the U.S. government. The Department of Justice intervened in the case and its investigation led to the settlement....

The federal government has filed a False Claims Act lawsuit against Teva and one of its subsidiaries. According to the complaint, the company violated the Anti-Kickback Statute in its marketing of its drug Copaxone. Prosecutors claim Teva illegally paid Medicare co-pays through corrupt foundations in order to boost sales of the multiple sclerosis medication.

No sooner had the lawsuit been announced than the value of Teva's shares dropped by about 10 percent, a clear indication that the company may be liable for millions of dollars in damages. This is a big blow for Teva, which has seen Copaxone sales dwindle over the last few years. Once a $4.2 billion-per-year earner, the drug brought in a meager $628 million (combining U.S. and European sales) between January and June of 2020.

Funneling Kickbacks Through Co-Pay Assistance Foundations

The DOJ alleges that between 2007 and 2015, Teva's purported donations to The Assistance Fund and Chronic Disease Fund were, in fact, illegal kickbacks because they were made knowing the foundations would use the money to assist patients with Copaxone co-pays, ultimately benefitting Teva. Meanwhile, the company increased the price of the drug by nearly 330%. By 2015, an annual supply cost a staggering $73,000....

An Oklahoma hospital, its manager and part-owner, the physician group that created the hospital, and two of the group's physicians will collectively pay $72.3 million to settle claims that they conspired to defraud the federal government and the State of Oklahoma.

The alleged kickback scheme was described in detail in a False Claims Act lawsuit filed against several defendants, including the Oklahoma Center for Orthopaedic and Multi-Specialty Surgery (OCOM), a surgical hospital; USP, a hospital management company; Southwest Orthopaedic Specialists (SOS), a group of orthopaedic surgeons; and two SOS physicians named Anthony L. Cruse and R.J. Langerman.

According to the whistleblower complaint, SOS, OCOM, and USP, the corporation that controls OCOM, conspired to defraud Medicare, Medicaid, TriCare, and Blue Cross Blue Shield Federal....

Novartis has agreed to pay $678 million to resolve allegations that it systematically violated the Anti-Kickback Statute in its marketing of Lotrel, Diovan, Tekturna, Exforge, Valturna, Tekamlo, and Starlix. Prosecutors alleged the drugmaker paid for lavish meals, golfing trips, and purported professional events at Hooters to induce doctors to prescribe its cardiovascular and diabetes drugs. According to the underlying lawsuit, high-prescribing physicians received hundreds of thousands of dollars for speaking at sham professional events.

According to the former Novartis sales representative who filed the complaint, the whistleblower’s former employer paid for nearly 80,000 of these sham events between 2002 and 2011. The Department of Justice later joined the False Claims Act lawsuit to try to recover funds paid by Medicare and other government health care programs for prescriptions tainted by the defendant’s alleged misconduct. The original lawsuit was filed in 2011, and the DOJ joined as a plaintiff in 2013.

The Justice Department’s investigation revealed that Novartis’s sham informational roundtables were often held at expensive restaurants like NYC’s Eleven Madison Park and D.C.’s Charlie Palmer Steak. In reality, prosecutors claimed, the roundtables were an excuse to treat physicians to fancy meals. In many cases, doctors got paid for speaking at events that never happened....

Governor Cuomo has signed an order to strengthen whistleblower protections for New York State’s health care workers. Described as, “An act to amend the labor law, in relation to prohibiting health care employers from penalizing employees because of complaints of employer violations,” New York Senate Bill S8397-A/A.10326 was sponsored by NYS Senator

Diane J. Savino and co-sponsored by NYS Senators Alessandra Biaggi, David Carlucci, Leroy Comrie, and Robert Jackson.

The New York State Senate’s website states that the new legislation “prohibits health care employers from penalizing employees because of complaints of employer violations,” providing “health care workers with greater whistleblower protections in the State of New York, so that patient care can improve and such workers can be safe.”

The act amends New York State’s labor law, creating “a new definition of ‘improper quality of workplace safety,’ where an employee is protected from employer retaliation if they report violations of this category.” Under the amended legislation, employees are also protected from retaliation if they report violations to news organizations or social media....

The COVID-19 pandemic has taken a tremendous toll on America’s elderly population. Nursing home residents have been hit the hardest, with 20,000 dead across the country as of mid-May. Many of those people have died due to negligence from staff and administrators. Naturally, families want to sue the culprits. Meanwhile nursing home operators are demanding immunity, often with success.

Prominent Elder Law attorney Brian Mahany explains, “If you live in Florida and watch the news, nursing home administrators are demanding immunity from lawsuits and even criminal prosecution. So far, 16 states have already caved to pressure from well-paid healthcare lobbyists.”

Mahany has it right. States that have passed COVID-19 immunity laws for nursing homes include some of the hardest hit by the pandemic. New York is one of them. As residents get infected and die en masse at facilities all over NYS, legal liability for inadequate care has become a thing of the past. When residents need the highest quality of care to prevent Coronavirus infection, nursing home administrators get a free pass to disregard mandatory care standards....

Guardian Elder Care Holdings Inc. and a list of related entities, including Guardian LTC Management and Guardian Rehabilitation Services (collectively, Guardian), have agreed to pay $15.4 million to settle a False Claims Act lawsuit. According to the complaint, Guardian billed government healthcare programs for medically unnecessary services. The company allegedly defrauded both Medicare and the Federal Employees Health Benefits Program.

Pennsylvania-headquartered Guardian operates over 50 nursing facilities in Pennsylvania, Ohio, and West Virginia. According to the whistleblower lawsuit filed by two rehab managers who worked at a Guardian facility in Carlisle, Guardian caused some of its facilities in all three states to bill the government for medically unnecessary services, at the highest level of Medicare reimbursement, solely to maximize profits.

The whistleblower complaint resolved by the $15.4 million settlement was filed under the False Claims Act (“FCA”). Under the FCA, whistleblowers with original information about a fraud can come forward and become eligible for an award ranging between 10 and 30 percent of any resulting recovery. The two whistleblowers in this case, Philippa Krauss and Julie White, will share a $2.8 million award....