Healthcare and Pharma Cases

South Carolina-based Lexington Medical Center has agreed to pay $17 million to resolve allegations of participating in illegal financial arrangements with Lexington physicians, the U.S. Justice Department announced Thursday. Former Lexington physician, Dr. David Hammett filed the initial whistleblower lawsuit that led the government to investigate. Dr. Hammett will collect nearly $4.5 million for reporting the alleged False Claims Act (FCA) and Stark Law violations.

Lexington Physician Agreements Violate Stark Law per Dr. David Hammett’s Suit

The Stark Law helps ensure that physicians base their patient referrals on medical need and not on financial gain. Lexington Medical Center allegedly violated the Stark Law when they entered financial agreements with 28 physicians that met three violation criteria: the agreements (1) consider the quantity and/or quality of physician referrals, (2) compensate the physicians in excess of fair market value, or (3) are not commercially reasonable....

Irvine-headquartered Johnson & Johnson subsidiary, Acclarent Inc., has agreed to pay $18 million in a settlement over false claims healthcare fraud allegations, the US Justice Department announced Friday. Whistleblower Melayna Lokosky filed the initial qui tam lawsuit that led to government investigation. Lokosky will receive a $3.5 million cash whistleblower award for her efforts in exposing the fraud.

Sinus Spacer Marketed For Off-Label Drug Delivery Use

Johnson & Johnson acquired the California medical device manufacturer, Acclarent, in 2010. The company specializes in the development of minimally invasive ear, nose and throat (ENT) technologies. Allegations in this case surrounded the marketing and distribution of a sinus spacer known as the Relieva Stratus MicroFlow Spacer....

Healthcare fraud is becoming more problematic and intricate every day. One might tend to believe that once a case is settled, that is basically the end of the matter; the bad guys have been made somehow accountable, the government recovers moneys lost, the whistleblower becomes the hero and gets a reward.

Unfortunately, healthcare providers given to fraudulent behavior seem to have found a way to try to get back some of the money they should never have received from Medicare/Medicaid in the first place. Namely, some of them have begun to sue their legal counsel, alleging that they “didn’t know” they were breaking the law. A recent case involving Tuomey Healthcare System, a North Carolina-based hospital, has put this particular legal strategy at the forefront of whistleblower news.

Michael Drakeford, Tuomey Healthcare Whistleblower, Alleged Kickbacks

In October 2015, Tuomey had reached a $72.4 million settlement with the government in a False Claims Act lawsuit initiated by whistleblower Michael Drakeford. The case, which spanned over 10 years and included various appeals, was based on allegations that Tuomey had violated the Stark law by entering into certain employment arrangements with physicians in exchange for referrals. The DOJ eventually agreed, and Tuomey was forced to settle, as it was faced with the risk of losing over $200 million in a potential trial....

According to a recent study published on the Journal of the American Medical Association (JAMA) doctors who were offered a single free meal (often valued under $20) from pharmaceutical representatives consistently ended up prescribing certain drugs. The conclusion of the study reads,

“Receipt of industry-sponsored meals was associated with an increased rate of prescribing the brand-name medication that was being promoted.”

While the authors saw fit to clarify that the findings represented an association and not a cause-and-effect relationship, the study’s outcome is nonetheless alarming. However, it comes as no surprise given the numerous multi-million dollar settlements pharma companies have been reaching, in connection with kickback scheme allegations, over the past few years.

The problem is complex. This and many previous studies have exposed just how easy it is for companies to lure doctors into prescribing certain drugs, sometimes drugs that are not the most beneficial for their patients....

Drayer Physical Therapy Institute, LLC has agreed to pay $7 million to settle allegations of health care fraud with the U.S. Attorney's Office for the District of South Carolina, acting U.S. Attorney Beth Drake announced Tuesday. Two whistleblowers in this case will share nearly $1.7 million for reporting the fraud and aiding in the investigation.

Former Employees Blow the Whistle on Drayer’s Fraudulent Billing

Hummelstown, Pennsylvania-based Drayer Physical Therapy Institute (DPTI) delivers physical therapy services across 130 clinics in 16 states. Two former DPTI employees filed a whistleblower claim alleging DPTI submitted false claims to Federal Employee Health Benefit Programs, Medicare and TRICARE....

St. Paul, Minnesota-based Cardiovascular Systems Inc. (CSI) has agreed to pay $8 million to settle a False Claims Act (FCA) lawsuit alleging the company used kickbacks and an off-label marketing scheme to increase medical device sales, the U.S. Attorney’s Office in the Western District of North Carolina announced Wednesday. Whistleblower Travis Thams stands to collect between $800,000 and $2.4 million for filing the initial claim and exposing the alleged FCA violations.

Device Sales Rep Travis Thams Alleges Kickbacks in Whistleblower Lawsuit

Thams began working for Cardiovascular Systems as district sales manager in 2012 and filed the initial civil False Claims Act complaint in July 2013. Thams’ suit claimed CSI provided physicians with all-expense-paid training programs in exchange for explicit agreements to use CSI products. CSI also allegedly paid physicians for sham “Speaker Bureau” services and traded medical devices for 3rd party referral channel marketing....

In the nation’s largest health care fraud sweep to date, the U.S. Departments of Justice (DOJ) and Health and Human Services (HHS) announced Wednesday that federal authorities charged 301 defendants across 36 federal districts for $900 million in false Medicaid and Medicare billings.

Sixty-one licensed medical professionals (28 of whom are physicians) are included among the 301 defendants named in the civil and criminal charges. According to the DOJ, the organized takedown is the largest ever in both the number of charged defendants and the amount lost to healthcare fraud.

The takedown, led by U.S. Medicare Fraud Strike Force teams, highlights the widespread health care fraud issue and affirms the federal government’s stance on corrupt behavior. Medical professionals working in hospitals, physical therapy clinics, occupational health clinics, home health care, psychotherapy facilities, durable medical equipment vendors and pharmaceuticals were among those arrested....

In a game-changing, unanimous decision, the U.S. Supreme Court ruled on Thursday that corporations billing government programs for payment must be in compliance with material regulations, including regulations not stated in express conditions of payment, or they could face False Claims Act (FCA) liability.

Universal Health v. Escobar has become one of the most influential FCA disputes in decades. Thursday’s Supreme Court decision validates the “implied certification” theory of FCA liability. It’s a win for both government programs determined to recover stolen funds and whistleblowers reporting fraud. At the same time, the high court has imposed a rigid materiality standard that will keep FCA plaintiffs on their toes.

Courts Previously Divided On Implied Certification Viability

The federal False Claims Act makes it a crime to knowingly submit false claims for payment or approval to the government. A claim is legally “false” when it contains erroneous information regarding billed-for services or products. However, some courts also hold a claim legally false when it impliedly or expressly certifies compliance with all conditions of payment defined in relevant statutes, regulations or contractual requirements....

The U.S. Department of Justice (DOJ) has opted to intervene in a false claims whistleblower suit against Prime Healthcare Services after investigating allegations of Medicare overbilling. Karin Berntsen, the whistleblower who filed the initial claim accusing Prime Healthcare of Medicare fraud, stands to collect between 15 and 25 percent of the total government recovery.

RN Karin Berntsen alleges $50M in Medicare overbilling

Berntsen, a registered nurse and Director of Quality and Risk Management with Prime Healthcare’s San Diego-based Alvarado Hospital Medical Center, filed her claim in the U.S. District Court of Los Angeles in fall of 2011, alleging Alvarado and 13 additional Prime Healthcare facilities violated the False Claims Act (FCA) by overbilling Medicare to the tune of $50 million....

Philips Respironics Inc. is forking over $34.8 million to resolve allegations it paid illegal kickbacks to its sleep apnea mask customers who are DME (durable medical equipment) suppliers, the Justice Department announced Wednesday. Pharmacist Dr. Gibran Ameer was awarded $5.38 million as a reward for blowing the whistle on Respironics. The federal government is recovering over $28.7 million of the settlement for taxpayers while the remaining $660,000 will go to defrauded state Medicaid programs.

Respironics’ Fit-For-Life Program Alerts Pharmacist to Kickback Arrangement

South Carolina pharmacist, Dr. Gibran Ameer, has worked for a number of medical supply companies in his career. He was serving as an executive for one of Respironics’ supplier customers when they allegedly offered his company their “Fit-For-Life” program – an allegedly illegal kickback deal to persuade him to sell their sleep apnea masks....