Thursday, March 13, 2014

First federal fraud investigation into PODs

For apparently the first time, federal enforcement officials are investigating a medical device firm known as a physician-owned distributorship (POD), according to Modern Healthcare magazine.

The investigation stems from a False Claims Act case against Dr. Aria Sabit, a neurosurgeon who has practiced in California and Michigan. The civil lawsuit alleges Sabit concealed profits he made as an investor of a POD for a spinal implant device and performed unnecessary spinal surgeries to increase sales.

PODs are medical device firms where physicians are the owners or investors.

“The hospital where those doctors have staff privileges buys equipment from the POD and provides it to the doctors to perform procedures,” Modern Healthcare said in the article. “The government's concern is that this creates a financial incentive for physician owners of PODs to perform more procedures.

Last year, the Office of the Inspector General for the Department of Health and Human Services issued a “national alert” warning doctors and hospitals about the potential dangers to patient safety and the fraud risks of buying surgical products from PODs.”

PODs accounted for 15 percent of the U.S. spinal device market in 2012. The spinal devices provided by these distributorships are supposed to lower the cost to Medicare. However, the OIG alert said hospitals that bought devices from PODs had increased rates of spinal surgeries compared to hospitals that did not buy from PODs, increasing the cost to Medicare over time.

Friday, February 28, 2014

West Virginia rejects whistleblower bill

Disappointing news for whistleblowers and all who want to stop corporate fraud: The West Virginia House of Delegates this week rejected a bill that would have given whistleblowers job protection and a reward for reporting fraud against the government.

With a 55-42 vote, the Government Fraud Prevention Act (House Bill 4001) was defeated despite strong Democratic support and testimony that the false claims law could return millions of dollars to the state that otherwise would be lost to fraud. Opponents claimed the legislation would be bad for business.

“The reality is there is nearly, by some accounts, a hundred billion dollars a year in Medicaid fraud,” said Judiciary House Committee Chairman Tim Manchin (D-Marion). “What more can we do to help taxpayers than stop people from cheating them, from taking their money?”

The whistleblower legislation may not be totally dead. West Virginia House Speaker Tim Miley (D-Harrison) said he was considering sending the bill to an interim committee for further study.

Tuesday, February 04, 2014

$11.6 million paid to a doctor -- kickback or coincidence?

With the threat of the Stark anti-kickback laws, companies have learned to disguise kickbacks paid to medical providers in various ways. CareFusion’s $40 million settlement with the Justice Department earlier this month raises the question of whether $11.6 million paid to a doctor’s company is a kickback or a coincidence, as highlighted by a Modern Healthcare article.

The government alleges in court documents that CareFusion concealed kickbacks by overpaying for services under two contracts it signed with Dr. Charles Denham’s company in 2008 as a way to influence the doctor’s work as co-chair of the National Quality Forum’s Safe Practices Committee.

Denham’s lawyer said the payment was for “an array of services.” In the settlement agreement with CareFusion, the government says that “CareFusion's payments to HCC were made for the purpose of influencing Dr. Denham's work as co-chair of the Safe Practices Committee and for the purpose of inducing Dr. Denham to recommend, promote and/or arrange for the purchase of CareFusion's product, ChloraPrep, in violation of the federal anti-kickback statute.”

The Safety Practices Committee recommended that surgeons use a particular CareFusion product for skin preparation. However, “that recommendation was stricken before publication in part because Denham's ‘inordinate’ interest in it raised suspicions among other patient-safety experts, and the evidence showing ChloraPrep was better than similar products on the market wasn't conclusive,” according to Modern Healthcare. The National Quality Forum severed ties with Denham, the magazine said.

Modern Healthcare reports that “Denham says he was surprised to see the U.S. Justice Department describe the money as kickbacks.” Denham’s attorney said that the government’s allegations are “blatantly false,” and it’s important to note that the doctor hasn’t been charged with any violations. But there are 11.6 million reasons why people might question whether his judgment was influenced by all that cold, hard cash.

Tuesday, January 28, 2014

Two Phillips & Cohen partners named to Lawdragon's 2013 "500 Leading Lawyers in America" list

Erika A. Kelton and Colette G. Matzzie, partners at Phillips & Cohen LLP, were selected for Lawdragon’s 2013-2014 “500 Leading Lawyers in America” list for their work on qui tam (whistleblower) cases.

Kelton is known for her cases that were major parts of the nation’s top two healthcare fraud settlements – the $3 billion GlaxoSmithKline settlement in 2012 and the $2.3 billion Pfizer Inc. settlement in 2009 – as well for her work representing whistleblowers in claims under the whistleblower reward programs of the Securities Exchange Commission, the Commodity Futures Trading Commission and the Internal Revenue Service.

Matzzie’s most recent cases include a qui tam lawsuit against Verizon Communications that settled for $93 million and a whistleblower case against Boehringer Ingelheim that settled for $95 million. This is Matzzie’s third year in a row being named to the “500 Leading Lawyers in America” list.

Phillips & Cohen attorneys have been selected to Lawdragon’s “500 Leading Lawyers in America” list every year since 2007 for their success with whistleblower cases.

Friday, January 17, 2014

West Virginia puts whistleblower bill on hold

Discouraging news out of West Virginia: The whistleblower bill the state legislature has been considering has been put on hold. In a unanimous vote the House of Delegates' Rules Committee put the bill on the inactive calendar to allow time for revisions.

Opponents, primarily Republicans and business interests, criticize the bill they say largely because it would have a retroactive effect and no cap on the amount a whistleblower could be rewarded.

However, Democratic representatives are still fighting for the bill. “The concept of the bill is good. It’s about good government,” said House Speaker Tim Miley (D-Harrison).

West Virginia legislative committee approves whistleblower law

West Virginia is considering a legislative proposal to enact a false claim law that would protect and reward whistleblowers with information about fraud against the state.

The West Virginia House Judiciary Committee approved the “Fair Claims Act” last week in a 15-9 vote, despite opposition from Republican legislators and business interests.

Opponents claim the state would be flooded with frivolous lawsuits if the whistleblower law was adopted – a typical claim by opponents that has never been the case since the federal False Claims Act was amended in 1986.

Thirty-two states have False Claims Acts that are based on the federal government’s law and were enacted to recover taxpayer dollars. “We’ve already missed out on millions and millions and millions of dollars,” said Judiciary House Committee Chairman Tim Manchin (D-Marion).

House Speaker Tim Miley (D-Harrison) said he hopes that the Fair Claims Act will help deter fraudulent behavior and incentivize whistleblowers to report internally.

The bill now will be considered by the full House. 

Friday, December 27, 2013

Qui tam cases helped recover $2.9 billion in 2013

The federal government recovered more than $3.8 billion in fiscal year 2013 from False Claims Act cases, in large part due to qui tam (whistleblower) cases, according to recent statistics released by the Department of Justice. This was the second largest total amount recovered in one year from cases involving fraud against the government. In 2012, the government recovered $5 billion.

“These recoveries would not have been possible without the brave contributions made by ordinary men and women who made extraordinary sacrifices to expose fraud and corruption in government programs,” said Assistant Attorney General Stuart F. Delery.

Other DOJ statistics for 2013:
  • Qui tam lawsuits were the basis for $2.9 billion out of the $3.8 billion recovered.
  • Whistleblower rewards for qui tam cases totaled $345 million.
  • Whistleblowers filed 752 qui tam lawsuits in 2013, an increase of over 100 compared to 2012.
  • Most of the recoveries ($2.6 billion) were from healthcare fraud cases.
  • Procurement fraud (mostly related to defense contracts) accounted for $890 million out of the total, which was a record in that area.

Monday, December 02, 2013

Phillips & Cohen partner featured on C-SPAN's "Washington Journal"

Colette Matzzie, a partner at Phillips & Cohen, was featured on C-SPAN’s “Washington Journal” today to discuss the 150th anniversary of the False Claims Act and the impact the law has had. In 1863, Congress enacted the statute, also known as “Lincoln’s Law,” to create incentives for private citizens to help stop fraud against the Union Army and give the government an effective remedy against fraud.

Matzzie responded to telephone calls and tweets from viewers with questions about the whistleblower law and concerns they have about their individual situations.

Since Congress strengthened the False Claims Act in 1986 with bipartisan support, whistleblowers have helped the government recover more than $50 billion in civil settlements and criminal fines from companies that have defrauded the government.

Matzzie also discussed some of Phillips & Cohen’s record-setting whistleblower cases, including the nation’s two largest healthcare fraud settlements. Phillips & Cohen qui tam lawsuits were the basis for the bulk of the settlements paid by – GlaxoSmithKline ($3 billion) and Pfizer Inc. ($2.3 billion).

Tuesday, November 19, 2013

Phillips & Cohen attorney moderates webinar for judges on False Claims Act litigation

Phillips & Cohen partner Colette Matzzie today moderated a webinar for federal district and appellate judges on “Recurring Issues in False Claims Litigation,” sponsored by the Federal Judicial Center. The FJC is the research and education agency for the United States courts. Its educational programs promote improvement in judicial administration in the US courts. The FJC webinar provided a tutorial on the history, law and practice under the federal False Claims Act including perspectives from a federal district judge, the director of the Justice Department’s Civil Frauds section, a defense attorney who was formerly a high-ranking DOJ official, as well as two whistleblower attorneys, including Matzzie.

Friday, November 08, 2013

Sutter Health pays $46 million in connection to bad billing practices

The effectiveness of the whistleblower reward program under the California Department of Insurance was demonstrated earlier this week when Sutter Health agreed to a $46 million settlement in connection with false and misleading surgery bills. The whistleblower case was brought by Rockville Recovery Associates in 2009, and the insurance commissioner joined the case in 2011. This qui tam case was filed under the California Insurance Frauds Prevention Act, which is similar to state and federal whistleblower programs.

Sutter allegedly charged up to $5000 for anesthesia services, on top of a separate anesthesiologist fee. The hospital operator was accused of charging this anesthesia fee even when no anesthesia services were used in the procedure.

In addition to paying the state $46 million, Sutter has also agreed to bill anesthesia services on a flat-rate system rather than hourly, “describe every component of its anesthesia billing, post…the cost [of] anesthesia services, clarify…the bills that consumers and insurers receive, and more readily permit insurers and other payers to contest Sutter’s bills.”

Insurance Commissioner Dave Jones calls this settlement a “groundbreaking step in opening up hospital billing to public scrutiny.”