Wednesday, May 30, 2007

Oklahoma, Georgia add false claims laws

Oklahoma and Georgia recently have enacted false claims laws that allow private citizens to file qui tam lawsuits to recover funds the states have lost due to fraud.

The Oklahoma Medicaid False Claims Act goes into effect Nov. 1. Despite the title, the law covers all kinds of fraud against the state in which it has lost money, not just Medicaid fraud.

Georgia passed its State False Medicaid Claims Act this month.

Tuesday, May 29, 2007

Medicare paid $718 million for improper mental health claims, auditors find

Nearly half of the payments Medicare made for Part B mental health services in 2003 didn't meet Medicare requirements, the Office of Inspector General for Health and Human Services has found.

As a result, the OIG said in an April 2007 report, Medicare paid out $718 million in improper payments.

The OIG recommended that CMS "revise, expand and reissue its 2003 program memorandum on Part B mental health services with an increased emphasis on proper documentation and coding."

Thursday, May 17, 2007

E-Rate fraud case resolved in Kansas

The Kansas City, Missouri School District (KCMSD) has agreed to relinquish over $13.6 million in claims for federal funds and to pay the United States $66,000 to resolve fraud allegations about the school district's E-Rate program stemming from a "qui tam" (whistleblower) lawsuit, the Justice Department announced today.

The E-Rate program, created by Congress in the Telecommunications Act of 1996, provides funding for needy schools and libraries to connect to and utilize the Internet. The E-Rate program is funded by monies collected from telephone users. The Federal Communications Commission oversees the program.

The U.S. contended that from 2002 to 2006 the KCMSD pursued claims for payments for a contract that had been cancelled, did not comply with the mandatory competitive bidding process and improperly extended contracts to avoid re-bidding. As part of the settlement, KCMSD agreed that three of its employees and the district’s consultant, Deitrich Lockard Group, all of whom handled KCMSD’s E-Rate applications, would no longer play a role in the program’s application and funding process for the school.

The government became aware of the fraud through a qui tam lawsuit that American Fiber Systems Inc. filed in May 2006.


Thursday, May 10, 2007

Scooter Store pays $4 million to settle Medicare fraud whistleblower case

The Scooter Store Inc. will pay the federal government $4 million and give up pending Medicare reimbursement claims worth $13 million to settle a whistleblower lawsuit and other government charges that the company violated the False Claims Act and defrauded Medicare, the U.S. Justice Department announced today.

As part of the $4 million settlement, the Scooter Store founder Douglas Trent Harrison will pay $500,000. He also agreed to forego dividends from his shares in the company for the next year in exchange for a release of his personal liability.

The U.S. alleged that the Scooter Store engaged in a multi-media advertising campaign to entice beneficiaries to obtain power scooters paid for by Medicare, Medicaid, and other insurers. Instead of the “zippy” power scooters that were advertised, the Scooter Store sold the beneficiaries expensive power wheelchairs that they did not want, need, and/or could not use.

The Scooter Store will operate for the next five years under a Corporate Integrity Agreement with the Office of the Inspector General at the Department of Health and Human Services that is designed to help ensure future compliance by the company with Medicare regulations.

The civil settlement also resolves claims in a suit brought by a whistleblower who was a former employee of the Scooter Store. The whistleblower will receive $3.2 million as a reward. Under the qui tam provisions of the False Claims Act, private parties can file an action on behalf of the United States and receive a portion of the settlement if the government reaches a monetary agreement with the defendants.

Wednesday, May 09, 2007

OxyContin maker pays $19.5 million to settle off-label marketing claims

Purdue Pharma, the maker of the painkiller OxyContin, has agreed to pay $19.5 million to settle off-label marketing claims and to stop illegal marketing practices that lead to greater abuse of the highly addictive drug, the Hartford Courant reports. The settlement involved 26 states and the District of Columbia.

Purdue Pharma encouraged doctors to prescribe the drug to be administered every eight hours rather than every 12 hours, as required by the U.S. Food and Drug Administration, said Connecticut Attorney General Richard Blumenthal and state Consumer Protection Commissioner Jerry Farrell Jr.

Although the drug has "enormous and extraordinary benefits" for many patients, Blumenthal said, illegal use of Oxycontin has been linked to increases in major crime committed by addicts.

Purdue denied that it had been pushing inappropriate dosing. Net sales of OxyContin were valued at $694 million in 2006, according to a Purdue spokesman.

Strike force arrests 38 in south Florida for Medicare fraud schemes

Thirty-eight people have been arrested in the first phase of a targeted criminal, civil and administrative effort against individuals and health care companies that fraudulently bill the Medicare program, government officials announced today.

The arrests in the Southern District of Florida are the result of the establishment of a multi-agency team of federal, state and local investigators designed specifically to combat Medicare fraud through the use of real-time analysis of Medicare billing data. Since the first phase of strike force operations began on March 1, 2007 in southern Florida, the strike force has obtained indictments of individuals and organizations that have collectively billed the Medicare program for $142 million.

All of the strike force cases to date target two primary schemes that defrauded the Medicare program – infusion therapy and durable medical equipment (DME) suppliers.

In one example, Eduardo Moreno, the owner of multiple DME companies, was arrested on April 7 after being named in a six-count indictment on fraud charges. Two of Moreno’s companies – Brenda Medical Supply Inc., and Faster Medical Equipment Inc. – allegedly billed Medicare for more than $1.9 million for services that were not medically necessary. The FBI has seized of some of Moreno’s assets, including a new Rolls Royce Phantom worth approximately $200,000.

“The landscape for fraud in south Florida has changed dramatically over the past two years. CMS has taken aggressive action to curb infusion therapy fraud and other organized fraud actions,” said Leslie Norwalk, acting administrator of the Centers for Medicare and Medicaid Services.

The strike force teams are led by a federal prosecutor supervised by both the Criminal Division’s Fraud Section in Washington and the office of U.S. Attorney R. Alexander Acosta of the Southern District of Florida. Each team has four to six agents, at least one agent from the FBI and HHS Office of Inspector General, as well as representatives of local law enforcement. The teams operate out of the federal Health Care Fraud Facility in Miramar, Fla.

Tuesday, May 08, 2007

Medicis Pharmaceutical settles off-label marketing case for $9.8 million

Medicis Pharmaceutical Corp. of Scottsdale, Ariz., will pay the United States $9.8 million to settle allegations that the company violated the False Claims Act by promoting the use of a topical skin preparation, Loprox, for use on children under the age of 10, without approval by the Food & Drug Administration (FDA). The settlement agreement was announced by the U.S. Dept. of Justice.

The U.S. and four whistleblowers alleged in a qui tam case that from approximately November 2001 through April 2004, Medicis sales personnel pushed pediatricians to use Loprox as a treatment for diaper rash even though it is not a “medically accepted indication” for the treatment of diaper dermatitis and other skin disorders in children under 10.

The Food, Drug & Cosmetic Act prohibits pharmaceutical companies from marketing or promoting a drug for uses that the FDA has not approved, a practice known as “off-label marketing.” In the case against Medicis, the United States alleged that the Medicaid program paid millions of dollars for Loprox prescriptions that would not have been reimbursed if government authorities had known that the prescriptions resulted from the company’s off-label marketing campaign.

Medicis sold its pediatric sales unit in 2004.

The government has awarded the whistleblowers, former Medicis employees, a total of $1.07 million. Under the qui tam provisions of the False Claims Act, private parties can file a lawsuit on the government's behalf if the government is being defrauded and are entitled to a portion of the amount the government recovers.


Wednesday, May 02, 2007

Physician accused of defrauding federal health plans

The federal government has joined a qui tam suit against a hand surgeon who allegedly submitted false claims to Medicare, Medicaid and the military's TRICARE program.

The doctor, Houshang Seradge, is accused of filing more than $2.6 million in false claims, according to documents filed in federal court in Oklahoma City. The suit seeks $40 million in damages, a figure arrived at by trebling the amount of the fraudulent submissions and adding penalties from $5,000 to $11,000 for each false claim.

The fraud allegations against Seradge were made in a whistleblower lawsuit filed under seal seven years ago by three former employees.

An AP story on the suit ran on May 2, 2007 in the Army Times.