Thursday, August 26, 2004

Whistleblowers aid in prosecution of health care fraud

The Associated Press reports that the False Claims Act has had its biggest impact in the health care industry. The story outlines some of the largest recoveries to date, including $1.7 billion paid by HCA to resolve Medicare fraud charges.

A government lawyer told AP that fraud is difficult to find without the help of whistleblowers. In fiscal year 2003 whistleblowers received $319 million in rewards for their contributions to fighting fraud against government programs.

The AP story was carried by the San Francisco Chronicle on August 24, 2004.

Monday, August 23, 2004

Technology company to pay $4.5 million to settle whistleblower suit

Vortec Corp. has agreed to pay $4.5 million to settle charges that it defrauded the federal Department of Energy. The suit, filed under the False Claims Act, alleged that the company overcharged the government on a hazardous waste recycling contract by billing for personal expenses, including hotel bills and auto repairs.

The whistleblower who reported the fraud was awarded $1.08 million.

The story appeared in the August 21, 2004 issue of the Philadelphia Inquirer.

Dept. of Justice investigates medical-supply industry

The New York Times reported that the United States Department of Justice has opened a criminal investigation to determine whether hospitals are overcharging Medicare and other government-funded health programs for goods ranging from rubber gloves to x-ray machines.

Medical-supply companies have received subpoenas and hospitals are expected to receive them in coming weeks. The inquiry apparently focuses on rebates, discounts and other marketing practices, and in particular on Novation, a large group purchaing organization.

The New York Times story appeared on August 21, 2004 (registration required).

Whistleblower complaint filed against Becton, Dickinson

The U.S. Department of Justice is reviewing a whistleblower complaint filed against the world's largest manufacturer of medical syringes. Becton, Dickinson dislosed the information in an SEC filing.

The whistleblower suit, filed under the False Claims Act, remains under seal. It comes at a time when the Justice Department is investigating the medical supply industry. See the related New York Times article (registration required) from August 21, 2004.

The Becton, Dickinson story was reported by Bloomberg on August 21, 2004.

Thursday, August 19, 2004

California hospital pays $2.2 million in FCA settlement.

The United States Attorney in Los Angeles announced that Downey Regional Medical Center has paid $2.2 million to settle allegations that the hospital submitted false claims to Medicare. Downey allegedly claimed and received reimbursement of expenses that were not allowed under Medicare, including interest, lobbying, legal and marketing expenses.

The U.S. Attormey's August 18, 2004 press release is available at their site.

Tuesday, August 17, 2004

5th Circuit rules Medicaid intermediary doesn't have sovereign immunity

The United States Court of Appeals for the Fifth Circuit has ruled that National Heritage Insurance Company is not immune from False Claims Act suits. The company had argued that, as a Medicaid fiscal intermediary, it was an arm of the state and could not be sued under the False Claims Act.

The underlying suit alleges that NHIC, along with Deloitte & Touche and Medicaid Claims Solutions of Texas, fraudulently billed Medicaid for School Health Related Services, getting Medicaid reimbursement for services the schools were already providing.

The text of the opinion, United States ex rel Barron v. Deloitte & Touche, is available at the court's website.

Billing company agrees to pay $1.3 million in FCA settlement

The United States Attorney for the Southern District of New York announced that Accordis, Inc. will pay $1.3 million to settle a False Claims Act suit. The private billing company submitted fraudulent claims for reimbursement to Medicare and Medicaid, including claims for abortion services. Federal law prevents federal funds being used for abortion services in most cases.

The settlement was reported in the August 16, 2004 issue of Modern Healthcare (registration required).

Envirocare attorneys move to have False Claims Act case dismissed

Lawyers for the giant disposal company will argue in federal district court in Utah that the suit brought by three whistleblowers should be thrown out. The suit alleges that Envirocare defrauded the government by mishandling toxic and radioactive waste at the Tooele landfill.

The Salt Lake City Tribune reported on developments in the suit on August 16, 2004.


Thursday, August 12, 2004

Medicare intermediaries pay to resolve whistleblower charges

Citigroup Inc.'s Travelers Insurance Co. and United Healthcare Insurance Co. have agreed to pay $10.9 million and $9.7 million respectively to settle charges that they defrauded Medicare. The two firms allegedly falsified expense reports to obtain higher reimbursement and performance incentives to which they were not entitled.

Crain's New York Business reported on the settlement on August 12, 2004 as did Modern Healthcare (registration required).

Miami US Attorney announces indictments in two health care fraud cases

Fourteen defendants were charged in a 324 count indictment for participating in a Medicare kickback scheme. The indictment alleges that three therapy companies paid kickbacks to assisted living facilities for access to patients. The therapy companies then billed Medicare for medically unnecessary and non-qualifying therapy.


In a separate indictment announced on August 5, seven individuals were charged in another Medicare fraud scheme. According to prosecutors, these individuals formed bogus durable medical equipment (DME) companies which billed Medicare for DME services which were not provided.


The United States Attorney's Office for the Southern District of Florida has posted both the August 4, 2004 press release on Medicare kickback scheme and the August 5 press release on DME fraud.

Houston US Attorney announces indictments in Medicare wheelchair fraud case

Two doctors and two owners of durable medical equipment companies have been charged in a scheme to defraud Medicare of $40 million.

The scheme involved the recruitment and transportation of Medicare beneficiaries to be approved for motorized wheelchairs. Many of these beneficiaries clearly did not meet the guidelines to receive such a wheelchair.

The 68-count indictment was announced by the United States Attorney for the Southern District of Texas on August 8, 2004.

Wednesday, August 11, 2004

Monroe County, NY, panel approves reward to Medicaid fraud whistleblowers

A committee of the Monroe County, NY, legislature has approved payment of up to $1,000 to anyone who gives information leading to a conviction for Medicaid or welfare fraud.

The proposal must still be put before the full county legislature.

These developments were reported in the August 4, 2004 edition of the Rochester Democrat & Chronicle.

Tuesday, August 10, 2004

Shipping company sentenced for illegally concealing dumping of waste oil

OMI Corporation, a Connecticut-based tanker firm that transports petroleum products, will pay a $4.2 million fine for concealing the dumping of waste oil and sludge at sea.

$2.1 million of the fine will go to the anonymous whistleblower, a former OMI crew member, who reported the crimes to the government. This is the largest reward ever issued under the bounty provision of the Act to Prevent Pollution from Ships.

The Dept. of Justice issued a press release on August 6, 2004.


Monday, August 09, 2004

Financial holding company will pay $16 million to settle FCA suit

Gold Banc Corp. announced that it has agreed to settle a qui tam suit which alleged that the company violated the False Claims act by charging excessive interest rates and fees on agricultural loans subject to the federal Farm Service Agency's Guaranteed Loan Program and Interest Assistance Program.

A definitive agreement must still be negotiated and agreed to by all parties.

The Kansas City Business Journal reported on the agreement on August 9, 2004.

Pennsylvania hospitals settle qui tam suit.

The United States Attorney for the Eastern District of Pennsylvania announced a settlement with two hospitals and a physician of allegations that the hospitals improperly provided space, equipment, personnel, supplies and directors' fees to the physician in exchange for patient referrals.

The hospitals and physician will pay fines totaling nearly $1.5 million.

The August 6, 2004 press release can be read at the U.S. Attorney's website.

New York City sues drug companies

New York City has filed suit in federal district court, alleging that 44 pharmaceutical companies inflated the average wholesale price of their drugs, resulting in a loss of tens of millions of dollars to the city's Medicaid program.

The New York Times reported on the story on August 6, 2004 (registration required).



Wednesday, August 04, 2004

Judge says suit against Gabelli alleging sham telecom auctions may proceed

A False Claims Act suit against the founder of Gabelli Asset Management Inc. will proceed. The suit alleges that Mario Gabelli plotted to use dozens of related companies and partnerships to buy FCC licenses at discounted prices. The discounts were available to small telecommunications businesses.

The judge did not rule on the merits of the case.

The suit seeks $600 million in damages.

Bloomberg News reported on the story on August 4, 2004.

Monday, August 02, 2004

Schering-Plough will pay $345 million in settlement of price fraud suit

The U.S. Dept. of Justice announced that Schering-Plough Corporation will pay $345 million dollars and plead guilty to criminal charges to resolve criminal and civil liabilities stemming from its fraudulent pricing of Claritin, an allergy medication.

The False Claims Act charges were based on Schering-Plough's failure to account for deep discounts it offered to Cigna and Pacificare when it reported its "best price" to the federal government.

The whistleblowers who initially filed suit on behalf of the federal government will share a reward of more than $31.6 million.

Read the U.S. Dept. of Justice's July 30, 2004 press release.
Schering-Plough's corporate integrity agreement is also available.
The New York Times July 31, 2004 article requires registration.