Tuesday, September 16, 2008

NY City hospital will pay $89 million to resolve fraud allegations

New York's Staten Island University Hospital will pay $88.9 million to settle allegations it had defrauded Medicare, Medicaid and an insurance program covering the military. According to the U.S. Dept. of Justice, the federal government will receive $74 million and New York State will receive $14.9 million. The settlement reflects, in part, whistleblower suits brought under the federal and New York False Claims Acts. Those relators will receive a total of $9.9 million.

The federal whistleblower suit claimed that SIUH fraudulently billed Medicare for stereotactic body radiosurgery treatment that was provided on an out-patient basis to cancer patients. The investigation established that from 1996 through 2004, SIUH defrauded Medicare and TRICARE by knowingly using incorrect billing codes for cancer treatment performed at the hospital. By using incorrect codes, SIUH obtained reimbursement for treatment that was not covered by Medicare or TRICARE.

Attorney General Andrew M. Cuomo said that the settlement with Staten Island University Hospital will return $24,806,471 to Medicaid, a program jointly funded by the state and federal governments. Of this amount, the State of New York will receive a total of $14,883,883.

The New York State portion of the suit alleged that SIUH billed Medicaid for inpatient detoxification treatment provided in a special unit within the hospital for which SIUH had not obtained a certificate of operation from the State.

DOJ blocked case against Kerr-McGee, US Attorney says

McClatchy newspapers reports that the U.S. Attorney in Colorado was blocked from supporting a whistleblower suit against Kerr-McGee.

U.S. Attorney Troy Eid said that senior Justice Dept. officials overruled his request to intervene in the whistleblower case, jeopardizing the government's prospects for recovering as much as $40 million from a major oil company for its alleged underpayment of royalties.

McClatchy found that the Justice Department has participated in only a handful of the 80 whistleblower cases brought against the oil industry since 1995.

Texas AG reaches $28 million settlement with Abbott Labs

Texas Attorney General Greg Abbott announced a $28 million civil settlement with Abbott Laboratories Inc.

The settlement resolves the state’s claims that the drug manufacturer falsely reported drug prices to the state and federal Medicaid programs. Under state and federal law drug manufacturers are required to report the prices at which they sell their products to various providers, including pharmacies, wholesalers and distributors. When a manufacturer reports inflated prices to the Medicaid program, as happened in this case, the taxpayer-funded program vastly overpays providers for their products.

Whistleblower case against Kerr-McGee revived

The Denver Post reports that the 10th Circuit has reversed a lower court dismissal of a $7.6 million jury verdict against Kerr-McGee. The suit, brought by a former Minerals Management Service auditor, alleged that Kerr-McGee underpaid the government on royalties for federal offshore oil leases.

The ruling was announced on the same day that federal investigators alleged that some employees of the federal Minerals Management Service improperly accepted gifts and engaged in sexual relationships with oil-and-gas industry representatives. The investigation was prompted in part by revelations made in a handful of lawsuits, including the auditor's False Claims Act suit.

U.S. sues Boeing for inflating contract price

The federal government filed a civil suit against Boeing, alleging that the company unlawfully inflated the price it charged the Air Force to manufacture the Towed Decoy System for the B-1 bomber.

The suit, filed in District Court in Los Angeles, contends that during contract negotiations Boeing failed to disclose that it would outsource the fabrication of most of the components of the parts that were to be used in the program.

Boeing’s own employees complained internally and warned their managers about the concealment, according to the complaint, but Boeing managers ignored the warnings and refused to tell the Air Force the truth. As a result, the suit alleges, Boeing inflated its contract price and consequently submitted 140 unlawfully inflated invoices to the Air Force, in violation of the False Claims Act. The lawsuit alleges that the Air Force paid $7.5 million more than it should have. Under the False Claims Act, the government may recover up to three times the amount of the loss, plus statutory penalties for each inflated invoice.

Annals of Internal Medicine article examines whistleblowers' impact on health care fraud

A synopsis of an article published in the September 2, 2008 issue of the Annals of Internal Medicine:

"Federal regulators have aggressively prosecuted health care fraud since the early 1990s, leading to billions of dollars in financial recoveries. Nearly all major cases today are qui tam actions, involving whistleblowers with inside knowledge of the allegedly illegal schemes. This article documents the outcomes of major enforcement actions and describe the schemes, defendants, and whistleblowers involved.... Among 379 cases, $9.3 billion was recovered, with more than $1.0 billion paid to whistleblowers.... Whistleblowers were frequently executives or physicians, and 75% were employees of defendant organizations... . This study illuminates the scope and characteristics of qui tam fraud litigation and the whistleblowers who animate this important tool for addressing waste in the health care sector."

Feds continue to investigate kyphoplasty fraud

Investigators from the US Attorney's Office in Buffalo and the US Dept. of Health and Human Services are looking into health care fraud involving kyphoplasty, according to a report in the Indiana Post-Tribune.

Federal agents are making unannounced visits to investigate hospital billing for kyphoplasty, a miminally invasive back surgery procedure.

Kyphon, the manufacturer and now a subsidiary of Medtronic, agreed in May to pay $75 million to settle a False Claims Act suit brought by two whistleblowers. The suit alleged that Kyphon sales and marketing staff illegally instructed physicians and hospital executives how to get higher Medicare reimbursements for kyphoplasty procedures by unnecessarily claiming them as an inpatient hospital services.

Report finds fraud and errors in Medicare payments for medical equipment

The rate of improper Medicare payments for wheelchairs and other durable medical equipment is much higher than the government has estimated, according to a report from the Dept. of Health and Human Services' Inspector General.

The report found an "error rate" of almost 29 percent in a sample of claims paid in 2006 under Medicare's multibillion-dollar durable medical equipment program. The Centers for Medicare and Medicaid Services had estimated a rate of 7.5 percent, or about $700 million in improper payments. Some of these improper payments were the result of insufficient documentation or lack of medical necessity, but others were the result of fraud.

California announces settlement with Citibank in whistleblower suit

California Attorney General Edmund Brown announced a settlement with Citibank regarding the company's illegal "account sweeping" program.

The company used a computer program that wrongfully swept positive balance accounts from credit-card customers into Citibank's general fund. The Attorney General launched an investigation into Citibank in 2005 to determine whether the company violated the California False Claims Act by filing false holder reports with the California State Controller that omitted any reference to the swept funds.

A whistleblower had uncovered the scam and alerted his superiors but they buried the information and continued the illegal practice. In the words of a Citibank executive, “Stealing from our customers is a business decision, not a legal decision.” The same executive later said that the sweep program could not be stopped because it would reduce the executive bonus pool. The whistleblowing employee was fired.

Citibank will pay $3.5 million in damages and civil penalties to the State of California.