Monday, December 27, 2004

U.S. files False Claims Act suit alleging company defrauded emergency relief agency

The United States Dept. of Justice has filed suit against DRC Inc., accusing the company of lying to secure a contract with the U.S. Agency for International Development or USAID.

The suit alleges that the company falsified its application in order to qualify for a contract to build and repair sewer systems in Honduras.

The company's lawyers contend that the government does not have standing to file the suit since their contracts were with the Honduran government, even though U.S. funds paid for the work.

The U.S. Government maintains that the entire $12.7 million paid to DRC was the result of fraud. Under the terms of the False Claims Act, that amount would be trebled and additional penalties may be imposed.

The suit was reported on in the December 24, 2004 issue of the Mobile Register.


Gold Banc whistleblower will receive more than $3 million

Roger Ediger, a lawyer from Enid, Oklahoma, will receive more than $3 million for his role in exposing a bank that allegedly inflated interest rates on federally guaranteed loans.

Gold Bank settled the suit for $16 million in November without admitting wrongdoing.

The Associated Press report was carried in the December 24, 2004 edition of the Enid News.


Wednesday, December 22, 2004

HealthSouth to settle False Claims Act suit

Modern Healthcare (subscription required) reported on December 21, 2004 that HealthSouth will pay $325 million to settle several whistleblower suits brought under the qui tam provisions of the False Claims Act.

The tentative settlement is expected to be finalized by the end of the year and would resolve claims that HealthSouth billed for unnecessary services, for services provided by uncredentialed providers and for individual physical therapy when group therapy was provided. HealthSouth also allegedly failed to report a gain from the sale of Caremark stock and falsified Medicare cost reports.

The Securities & Exchange Commission is investigating the company for securities fraud and there are also criminal charges pending against HealthSouth personnel.

Tenet will pay $395 million for unnecessary heart surgeries

Tenet Healthcare has agreed to pay $395 million to settle charges by former patients that the hospital chain's Redding Medical Center performed unnecessary heart surgeries.

More than 750 patients filed civil lawsuits over heart bypass operations and cardiac catheterizations.

The settlement follows Tenet's August agreement to pay $54 million in settlement of federal and state investigations into the heart surgeries. The company sold the Redding facility in June.

USA Today reported on these developments on December 22, 2004.

Monday, December 20, 2004

Massachusetts day treatment center will settle Medicaid overcharge claims

A day treatment center for disabled people in Ashland, Massachusetts, overcharged the government Medicaid program by exaggerating clients' disabilities to earn bigger payments, according to federal and state investigators.

Columbia Hospital Corp., which previously owned the MetroWest Day Habilitation Program in Ashland, has agreed to pay Massachusetts and the federal government $960,000 to settle the claims.

The settlement is the result of a whistleblower suit filed by a woman who worked at the center and who reported the fraud. She will receive a reward of $160,000.

The Boston Globe reported on the story on December 16, 2004.

Massachusetts charges dental corporation with Medicaid fraud

Massachusetts has brought both criminal charges and a civil suit alleging violation of the state's Medicaid False Claims Act against a dental corporation. The False Claims Act suit alleges that
Miller Solowsky & Associates and Ronald Miller submitted phony bills for services that were never provided and "unbundled" services, charging separately for procedures that should have been billed together at a reduced cost.

The Massachusetts Attorney General's Office issued a press release on December 15, 2004.

Whistle blower suit alleges GE covered up defects

A former quality-control engineer at General Electric's aircraft engine plant alleges that the company concealed defects. The suit contends that the company continued shipping defective jet engine blades rather than correcting the problem, even though it knew that the defects could cause catastrophic failures.

Terri Brown brought the suit, which seeks $64.4 million in damages, under the qui tam provisions of the federal False Claims Act.

The story is reported on in a December 11, 2004 Associated Press story.

US security firm says it can't be sued for fraud under the False Claims Act

Custer Battles, a U.S. security firm that is accused of settling up sham companies in a fraud scheme in Iraq, says that it cannot be sued under the False Claims Act because the money involved belonged to Iraqis, not Americans.

Attorneys for the company say that the Coalition Provisional Authority, the body that ruled occupied Iraq, was not a U.S. agency and that the money involved was Iraqi money and not subject to suit under the False Claims Act.

The issue has not yet been decided but if the judge finds that the False Claims Act does not apply, the fraud may go unpunished.

The Department of Defense has suspended Custer Battles from future U.S. government contracts and a criminal investigation of the company's actions continues.

The Los Angeles Times article was reprinted in the December 20, 2004 issue of the Pioneer Press.

Thursday, December 16, 2004

United Healthcare Insurance to pay $3.5 million in Medicare fraud settlement

United Healthcare Insurance Company will pay the United States $3.5 million to settle charges that it knowingly mishandled phone inquiries from Medicare beneficiaries and providers. The company allegedly provided false performance information to the Centers for Medicare and Medicaid Services.

A former employee, who filed a whistleblower lawsuit under the federal False Claims Act, will receive $647,500 of the settlement amount.

The Dept. of Justice press release was issued on December 13, 2004.

Monday, December 06, 2004

New York City Council issues report on False Claims ordinance

The New York City Council has been considering an amendment to the city's administrative code to allow for civil penalties and a private right of action in suits alleging fraud against the municipality.

The proposed legislation is modeled on the federal False Claims Act and, like the federal law and the laws of several states, allows a whistleblower to bring a "qui tam" suit on behalf of the city.

The Committee on Governmental Operations issued a report on November 9, 2004. The text of the proposed law (Int. No 346-2004) is available at the City Council's website.

Gambro will pay more than $350 million to settle health care fraud case

A whistle blower lawsuit brought by a former Gambro Healthcare medical officer has resulted in a settlement of over $350 million. The suit alleged that the operator of renal dialysis clinics paid kickbacks to physicians and made false statements to obtain reimbursement for unnecessary tests and services.

Steven Bander, the whistle blower, will receive a portion of the recovery under the qui tam provisions of the False Claims Act.

The settlement was announced by the United States Attorney's Office for the Eastern District of Missouri in a December 2, 2004 press release.

Medco kickback offer to UnitedHealth investigated

The Wall Street Journal reported on December 6, 2004 that the Justice Department is investigating allegations that Medco Health Solutions made an offer of more than $200 million in kickbacks to UnitedHealth Group.

Medco, a pharmacy benefits manager, supposedly made the offer to win business from the managed care organization. The information comes from documents filed in U.S. District Court in Philadelphia in connection with a fraud lawsuit against Medco. The filing does not name UnitedHealth, but refers to a large managed health care organization and says that the government wants to interview one former and one current UnitedHealth employee.

Medical products company will pay $35 million in False Claims Act settlement

Polymedica Corporation and two of its subsidiaries will pay the United States $35 million to resolve allegations that they submitted claims to Medicare without proper documentation. The improper reimbursement claims were for various diabetic and nebulizer products.

The settlement states that the subsidiaries, Liberty Medical Supply and Liberty Home Pharmacy, violated the False Claims Act by not obtaining a signed doctor's order for the products and by not maintaining records documenting the need for and use of these products.

The case was the result of a whistle-blower complaints filed by Donna Ben-Barrack and Claire Schultz.

The press release from the Dept. of Justice was issued on December 2, 2004.

Thursday, December 02, 2004

TAP Pharmaceuticals to pay $150 million to settle drug overcharge case

TAP Pharmaceuticals will pay $150 million to settle claims it overcharged consumers and private insurers for Lupron, a drug used to treat prostate cancer, endometriosis and premature puberty.

TAP had paid the government $885 million in 2001 to resolve charges that it participated in a criminal conspiracy by providing doctors with free samples of Lupron for which Medicare was billed.

The current settlement was reported on in the December 2, 2004 issue of the Boston Globe.

Pharmacy benefits manager charged in kickback scheme

Medco, the largest pharmacy benefits manager in the United States, has been accused of paying over $200 million in kickbacks to a managed care company in order to obtain contracts.

The allegations are part of a civil lawsuit brought by the U.S. Attorney's Office in Philadelphia. This is the second time Medco has been accused of paying kickbacks to a health insurer.

Phramacy benefits managers purchase large quantities of discount medicines for clients such as government agencies and hospitals. With drug prices rising, government officials have begun investigating whether pharmacy benefit managers are passing their best prices along to state agencies and consumers.

The New Jersey Star-Ledger reported on the story on December 2, 2004.

Wednesday, December 01, 2004

Loma Linda doctors settle billing fraud case

A group of faculty practice corporations affiliated with Loma Linda University has paid the United States $2.2 million to resolve allegations that they submitted false claims to Medicare. At teaching hospitals such as Loma Linda, Medicare rules allow reimbursement for services performed directly by the clinical faculty or by residents and interns under their direct supervision. Investigators found that their was insufficient evidence that faculty memebers were directly involved in performing some of the services billed for. In addition, investigators found evidence of "upcoding," the practice of submitting claims for greater levels of service than were actually provided.

The U.S. Attorney's Office in Los Angeles released a press release on November 30, 2004.