Tuesday, June 23, 2009

Supreme Court to hear FCA case on public disclosure bar

The U.S. Supreme Court has agreed to hear a case on whether whistleblower lawsuits are restricted if the information behind the lawsuits came out in state or local agency reports or audits, rather than in a federal proceeding. The False Claims Act includes a "public disclosure bar," making it more difficult for individuals to bring qui tam suits when the information has been publicly disseminated. Lower courts have disagreed as to whether state reports and audits were intended by Congress to raise that bar.

The underlying lawsuit alleged fraud by a water conservation district in the use of federal disaster assistance.

The case is Graham County Soil & Water Conservation District v. United States ex rel. Wilson, 08-304. The Scotus Blog has posted the filings in the case.

Monday, June 22, 2009

Increased FCA exposure for broker-dealers who advise public entities?

The Obama Administration has released a blueprint for regulatory overhaul, Financial Regulatory Reform: A New Foundation.

Among the changes proposed is one that could have False Claims Act ramifications: the establishment of a fiduciary duty for broker-dealers offering investment advice.

If enacted, this change could make sales of investments to public pension funds or in connection with municipal finance transactions more readily subject to scrutiny and state FCA enforcement. To the extent brokers are overpricing investments on sale, undervaluing them on purchase, or burdening transactions involving public funds with fees, a FCA action may provide a remedy. This proposal could shift the investment landscape from “Buyer Beware” to “Broker Beware.”

The adminstration's white paper highlights five primary objectives:

(1) Promote robust supervision and regulation of financial firms.
(2) Establish comprehensive supervision of financial markets.
(3) Protect consumers and investors from financial abuse.
(4) Provide the government with the tools it needs to manage financial crises. (5) Raise international regulatory standards and improve international cooperation.

Monday, June 15, 2009

Kindred Healthcare settles drug overbilling suit

Kindred Healthcare, Inc. and its successor PharMerica Healthcare Pharmacy, LLC, have agreed to pay over $1.3 million to settle claims that Kindred overbilled TennCare and the Medicaid program for pharmaceuticals, according to a press release from the U.S. Attorney's Office for the Eastern District of Tennessee.

Kindred provides medications to TennCare patients in group homes and long-term care facilities throughout Tennessee. The suit, which originated as a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act, alleged that Kindred's Knoxville facility billed for a higher number of drugs than were actually administered.

HHS and DOJ announce interagency anti-fraud effort

The Dept. of Justice and the Dept. of Health and Human Services have announced the creation of an interagency effort, the Health Care Fraud Prevention and Enforcement Action Team (HEAT), to combat Medicare fraud. In addition, Medicare Fraud Strike Forces, already operating in South Florida and Los Angeles, will be expanded to Detroit and Houston.

The strike force teams, established in 2007, use a "data-driven" approach to identify unexplainable billing patterns and investigate these providers for possible fraudulent activity. The Medicare Fraud Strike Force team operating in South Florida has already convicted 146 defendants and secured $186 million in criminal fines and civil recoveries.

Tennessee USAO files FCA suit against health management company

The U.S. Attorney's Office for the Middle District of Tennessee has filed a False Claims Act suit against Diversified Health Management, Incorporated (Diversified), James W. Carell (the company's president), and the James W. Carell Family Trust.

Diversified acted as the mangement company for three home health agencies. Medicare rules required disclosure of related parties, but Diversied and the home health agencies farudulently concealed the fact that Carell controlled all four entities.

The government is seeking three times the $6.3 million it says it would not have paid had it known of the relationship.

Honolulu hospital pays $2 million to settle qui tam sui

Queen's Medical Center of Honolulu, Hawaii has paid a total of $2.5 million to settle two whistleblower suits that alleged overbilling of the Medicare program, the State of Hawaii Medicaid program, and TRICARE, the federal health benefits program for military dependents. The settlement agreement was signed on April 27, according to the U.S. Attorney's Office.


The False Claims Act suit alleged that QMC submitted false bills for pharmaceuticals dispensed at the hospital, and billed federal programs for services provided by residents without the level of supervision required by federal rules.

NJ University Hospital settles qui tam suit alleging double billing of Medicaid

The University of Medicine and Dentistry of New Jersey (UMDNJ) has agreed to pay the United States $2 million to settle a whistleblower suit that alleged its hospital violated the False Claims Act. The suit contended that University Hospital submitted claims to Medicaid for outpatient physician services that were also being billed by doctors working in the hospital’s outpatient centers.

The Justice Department press release said that the $2 million is in addition to $4.9 million UMDNJ had already paid to resolve criminal charges of double billing.

California mortgage company accused of violating False Claims Act

The federal government has accused California mortgage lender Capmark Finance Inc. of violating the False Claims Act.

In a lawsuit filed in U.S. District Court in Los Angeles, the Justice Department charges that Capmark made false statements on applications for federal mortgage insurance covering residential nursing homes.

Three HealthEast hospitals settle qui tam suit

Three HealthEast hospitals in the St. Paul, Minnesota, area have agreed to pay the federal government a total of $2.28 million to settle a whistleblower lawsuit alleging Medicare fraud involving a certain type of spinal surgery known as kyphoplasty, the Dept. of Justice announced on May 21. The hospitals increased their payments for the procedure by performing them as inpatient surgery when they could have been safely performed on an outpatient basis.

The relators, Craig Patrick and Chuck Bates, were represented by Phillips & Cohen LLP. Attorney Tim McCormack praised the work of the U.S. Attorney's Office in Buffalo, which is leading the government's fraud investigation into kyphoplasty.

Regency Nursing and Rehab settles false claims allegations

Texas nursing home chain Regency Nursing and Rehabilitation Centers will pay the federal government $4 million to resolve allegations it submitted false claims to Medicare and Medicaid.

The Justice Department announced the settlement on May 21. The False Claims Act suit accused Regency of submitting slaims for reimbursement of rehabilitation and skilled nursing services that were provided to residents who were not qualified for the services, were not medically necessary, or were not supported by adequate documentation.

Aventis settles FCA suit for $95.5 million

Aventis Pharmaceutical agreed to pay $95.5 million to settle allegations it violated the False Claims Act by misreporting drug prices, the Dept. of Justice announced on May 28.

The government said Aventis manipulated its "best price" numbers for nasal sprays by entering into an agreement with the HMO Kaiser Permanente that repackaged Aventis' drugs under a new label. The agreement allowed Aventis to avoid paying millions of dollars in rebates to Medicaid programs, the department said.