Thursday, November 30, 2006

Miami hospital settles False Claims Act suit

Larkin Community Hospital in Miami and its current and former owners have paid $15.4 million to settle federal and Florida civil health care fraud claims against them. The Justice Department
filed a False Claims Act suit against the parties in 2004. The state of Florida joined the suit, which alleged that Larkin paid kickbacks to physicians in return for patient admissions.

The Dept. of Justice's November 30, 2006 press release has additional details.

Amerigroup seeks to reduce FCA award

Amerigroup, a managed care provider, is seeking to reduce the damages awarded by a jury last month. The jury had found that Amerigroup discriminated against pregnant women in order to avoid paying for costly care, thereby defrauding the Illinois Medicaid program.

The jury awarded damages amounting to $48 million, which would be automatically tripled under the federal False Claims Act and the Illinois Whistleblower Reward and Protection Act.

The Virginia Pilot of November 29, 2006 reported on these developments.

KBR to pay $8 million to resolve overbilling in Kosovo contracts

KRB, a subsidiary of Halliburton, has agreed to pay the government $8 million to resolve accusations of overbilling related to the firm's work for the Army in the Balkans, the Justice Department said yesterday.

The False Claims Act suit had alleged that the company engaged in double-billing, inflating prices and providing products that didn't fit the Army's.

The company "is at the heart of several other pending False Claims Act cases," according to a November 30, 2006 article in the Washington Post.

Integris Baptist Medical Center will pay $12.2 million in False Claims act settlement

The U.S. Attorney for the Western District of Oklahoma announced that Integris Baptist Medical Center, Inc. and Integris Health, Inc. have agreed to pay the United States $12.2 million to resolve allegations that they submitted inflated Medicare claims in their annual cost reports.

The suit originated as a whistleblower suit filed under the qui tam provisions of the False Claims Act by Frank Heckenkemper. Mr. Heckenkemper alleged that Integris sought reimbursement for costs related to its organ transplant department that it knew were not reimbursable under Medicare and for organ acquisition costs for transplant services provided to non-Medicare patients. Mr. Heckenkemper will receive $2.3 million as a share of the recovery under the settlement. He was represented by Peter Chatfield of the law firm of Phillips & Cohen LLP.

Additional details of the settlement can be found in the November 29, 2006 edition of the North Texas e-News.

Saturday, November 25, 2006

U.S. Justice Dept. recovers $3.1 billion in fraud and abuse claims

The United States Dept. of Justice recovered a record $3.1 billion in settlements and judgments in cases involving fraud against the government in the fiscal year ending September 30, 2006. This total topped the previous high of $2.2 billion for fiscal year 2003.

Two settlements, involving Tenet Healthcare Corp. and the Boeing Co., comprised nearly half the total.

Since the amendments to the False Claims Act in 1986, the Justice Dept. has recovered $18 billion in cases of fraud against the government.

In its November 21, 2006 press release the Dept. of Justice said that government-initiated claims accounted for $1.8 billion of the total $3.1 billion, while suits brought by whistle blowers under the False Claims Act's qui tam provisions accounted for the remaining $1.3 billion.

In FY 2006, whistleblowers were awarded $190 million.

Monday, November 20, 2006

Suit alleging uranium cleanup fraud unsealed

A whistleblower suit alleging fraud by contractors hired to clean up a Cold War-era uranium enrichment plant was unsealed by a federal court in Ohio.

The suit accuses Bechtel-Jacobs Co. and Safety and Ecology Corp. of falsifying work records, taking shortcuts and failing to protect the health of workers and neighbors of the Portsmouth Gaseous Diffusion Plant. The facility, about 60 miles south of Columbus, Ohio, produced enriched uranium for 50 years and closed in 2001.

The suit was filed under the qui tam provisions of the False Claims Act, which allows private citizens who learn of fraud against the government to bring a suit in the government's behalf. The Dept. of Justice declined to join this suit.

Additional information is available in the November 19, 2006 issue of the Akron Beacon-Journal.

Tuesday, November 14, 2006

Medicaid prescription drug fraud claims settled by Omnicare for $49.5 million

Omnicare, Inc. will pay the federal government and 43 states $49.5 million to settle allegations that the pharmacy service provider defrauded Medicaid.

The suit, which was initiated by two whistle-blower actions brought under the qui tam provisions of the False Claims Act, alleged that Omnicare substituted different forms of prescribed drugs (such as tablets for capsules) solely to increase their profit.

The settlement was announced by the United States Attorney for the Northern District of Illinois and additional details are available in the press release dated November 14, 2006.

The press release notes that this was the first time a U.S Attorney’s Office joined forces with the National Association of Medicaid Fraud Control Units (NAMFCU) to conduct a joint health care fraud investigation. NAMFCU is an organization of 49 state Medicaid Fraud Control Units.

Monday, November 13, 2006

Connecticut hospital settles Medicare fraud suit

Danbury Hospital of Danbury, Connecticut, has entered into a settlement agreement with the federal government to resolve allegations that it violated the False Claims Act by submitting false claims to the Medicare program.

The hospital will pay $2.4 million in settlement of charges that it assigned improper billing codes, called diagnostic related group or DRG codes, to patient hospital stays, resulting in excessive reimbursement to the hospital.

The Connecticut U.S. Attorney's Office issued an October 26, 2006 press release on the settlement.

HealthSouth pays United States $4 million to settle fraud allegations

HealthSouth Corporation has paid the United States $4 million to settle civil allegations that it defrauded Medicare by submitted fraudulent claims for prosthetic and orthotic devices. Qui tam suits in Tennessee and Florida triggered the government's investigation.

The suit alleged that HealthSouth had arrangements with medical equipment suppliers which allowed those suppliers to illegally receive Medicare payments for prosthetic and orthotic devices. The suppliers furnished those devices to HealthSouth at no charge, and HealthSouth used them fo its inpatient Medicare beneficiaries. In many instances, this resulted in double Medicare payments for the same device. In other instances, it allowed HealthSouth to underreport the true cost of treating its Medicare inpatients and to receive bonuses based on those understated costs.

The U.S. Attorney for the Middle District of Tennessee issued an October 31, 2006 press release on the settlement.

Comprehensive Cancer Center settles whistleblower suit for $900,000

Comprehensive Cancer Centers, Inc. (CCC) will pay the federal government $900,000 to settle allegations that it defrauded the Medicare program by using an "upcoding" scheme.

The suit, which originated as a whistleblower action under the qui tam provisions of the False Claims Act, alleged that CCC, which manages the outpatient cancer center at Desert Regional Medical Center, knowingly caused Desert Regional to overcharge Medicare by improperly using certain diagnostic codes that resulted in higher reimbursement payments than the cancer center deserved.

The $900,000 settlement also resolves allegations that CCC caused Desert Regional to submit Medicare cost reports that sought reimbursement for unreasonable management fees paid to CCC.

The press release from the Office of the U.S. Attorney for the Central District of California was issued on November 7, 2006.

Monday, November 06, 2006

Medicaid managed-care insurer settles whistleblower suit

Keystone Mercy Health Plan, a Philadelphia-based Medicaid managed-care insurer, has agreed to pay $5 million to settle a benefits-claims dispute.

The suit, which began as whistle-blower action under the False Claims Act, alleged that Keystone Mercy failed to return overpayments for some Medicaid services to the Pennsylvania Department of Public Welfare during 1997 and 1998.

Keystone Mercy manages Medicaid services for more than 273,000 residents in Philadelphia and surrounding Pennsylvania counties.

The settlement agreement, dated October 25, 2006, is available at the U.S. Attorney for the Eastern District of Pennsylvania website. A Philadelphia Inquirer story ran on October 27, 2006.

Gas royalty cases dismissed

A federal judge dismissed a group of False Claims Act suits that charged natural gas companies with underreporting their production on federal lands.

The 73 cases, brought by a whistleblower under the qui tam provisions of the False Claims Act, alleged that the inaccurate measurement of gas production caused the federal government to receive less than the true amount it was due in royalties. The court ruled that the whistleblower, Jack Grynberg, possessed only second-hand or speculative knowledge. Federal law requires that to collect a relator's share, a person must show the government new information about the fraud they allege.

Grynberg has said he will appeal the ruling.

The ruling was reported on in an October 31, 2006 AP story in Business Week.

Nebraska hospital pays $4 million in qui tam suit

St. Elizabeth Regional Medical Center of Lincoln, Nebraska has paid the federal government and State of Nebraska $4 million to settle allegations that it knowingly failed to disclose and failed to return overpayments made by the federal Medicare and the Nebraska Medicaid programs.

The suit began as a qui tam action under the whistleblower provisions of the False Claims Act. The whistleblower, Mark Razin, is a former employee of Healthcare Financial Advisors, a consulting firm that assisted hospitals in preparing cost reports that were submitted to the Medicare and Medicaid health insurance programs. Mr. Razin was represented by the law firm of Phillips & Cohen.

The lawsuit alleged that HFA helped its hospital clients seek reimbursement for unallowable costs and helped conceal known overpayments from the government. The lawsuit specifically alleged that HFA helped clients reopen previously filed cost reports to seek reimbursement for various categories of costs that it had inadvertently failed to claim in its original cost reports, while simultaneously concealing from the Medicare or Medicaid programs overpayments the hospitals knew they had received on account of the original cost reports.

The settlement with St. Elizabeth is the latest of a series of settlements with defendants in the qui tam suit. In 2005, Eisenhower Medical Center, paid the federal government $8 million to resolve allegations that it submitted false claims in Eisenhower's 1990 through 1998 Medicare cost reports (see: In 2004, HealthSouth Corporation paid the federal government $736,410 to resolve allegations that it submitted false claims in HealthSouth Bakersfield's 1992 Medicare cost report (see: In 2002, Lovelace Health Systems, a New Mexico hospital and health maintenance organization owned by Cigna Corporation, paid the federal government $24.5 million to resolve allegations that it submitted fraudulent claims in 10 years of Medicare cost reports and reopening requests (see: Also in 2002, St. Joseph's Hospital in Houston, one of the CHRISTUS chain of hospitals, paid $1,569,000 to resolve allegations that it knowingly failed to disclose an overpayment made by the federal Medicare program (see:

Most of this information is from the press release issued on October 30, 2006 by the U.S. Attorney's Office for the Central District of California.

Jury finds Amerigroup violated False Claims Act

A federal jury found insurance company Amerigroup Corp. and an Illinois affiliate liable for discrimination by denying coverage to pregnant women. The jury awarded $48 million to the plaintiffs (including the federal and Illinois governments and a whistleblower former employee), an amount that will be tripled under the provisions of the False Claims Act. The company could also be liable for as much as $199 million in penalties.

Amerigroup had contracted with Illinois to provide services to Medicaid patients but decided to maximize its profits by keeping pregnant women and others with expensive medical conditions off its rolls. That cheated the government, which was subsidizing the company to market its services evenly among all low-income patients.

The verdict was reported on in the October 30, 2006 editions of Bloomberg News and the Houston Chronicle.

Shipper pays $4.2 million to settle False Claims Act charges

AIT Worldwide Logistic Inc., has agreed to pay $4.2 million to settle a whistleblower suit brought under the qui tam provisions of the False Claims Act.

The suit alleged that the shipper provided illegal gratutities to secure contracts at Norfolk Naval Shipyard. All of the shipyard's bills of lading between 1999 and 2004 were awarded to AIT.

The company did not admit liability in the settlement.

Additional details are available in the October 21, 2006 issue of The Virginian-Pilot.