Brookhaven Memorial Hospital will pay $2.92 Million to resolve FCA suit

Brookhaven Memorial Hospital Medical Center will pay $2.92 million to settle a False Claims Act suit that alleged the the hospital defrauded Medicare. The Justice Department press release says the suit charged that the hospital fraudulently inflated its charges to Medicare patients to obtain enhanced reimbursement from the federal health care program. Medicare pays supplemental reimbursement, called "outlier payments," to health care providers when the cost of care is unusually high.

The suit originated as a whistleblower lawsuit brought under the FCA's qui tam provisions by Tony Kite. He will receive approximately $613,000, plus interest, out of the settlement proceeds.

Mr. Kite was represented by Larry Zoglin of Phillips & Cohen LLP and the law firm of Hagens Berman.

States and water districts join qui tam suit against PVC pipe manufacturer

A whistleblower lawsuit accuses J-M Manufacturing, the corporate predecessor of JM Eagle, of supplying defective PVC pipe to states and municipalities across the country. Nevada, Virginia, Delaware, Tennessee and thirty-nine California municipalities and water districts have joined the suit.

The suit alleges that from at least 1996 through 2005 the majority of the PVC pipe J-M Manufacturing manufactured and sold had "tensile strength" below the minimum required by applicable industry standards and J-M's contracts. These pipes, used in water and sewer systems that are mostly owned and operated by municipalities and public water districts, would have a shorter life span, are more likely to fail and will need to be replaced more quickly than pipes manufactured to specification.

According to the whistleblower, John Hendrix, J-M deceived its customers by cherry-picking the pipe samples tested by outside certification agencies such as Underwriters Laboratories (UL), International Plumbing and Mechanical Officials and NSF International, while continuing in its day-to-day operations to use a cheaper manufacturing process that produced weaker pipes but enabled the company to increase its profits.

The New York Times reported on the developments.

New Jersey amends its False Claims Act

New Jersey has amended its False Claims Act to bring it into compliance with the federal Deficit Reduction Act. If the Inspector General of the Dept. of Health and Human services finds that the state law is in compliance, the state is entitled to enhanced recovery in Medicaid fraud cases.

To be compliant the state law must be at least as effective in rewarding and facilitating qui tam actions as the federal False Claims Act.

The prior version of the New Jersey False Claims Act was found to be deficient. The amendments:

1) Delete language in section 1 enabling the Attorney General to take over a qui tam action that is based upon facts underlying a pending Attorney General investigation;
2) Amend language in section 2 related to the award of attorney’s fees and other costs so that a person bringing a qui tam action may collect such expenses as an award against the defendant; and
3) Preclude in section 3 the initiation of qui tam actions based upon allegations or transactions that are the subject of a pending action or administrative proceeding to which the State is already a party.

Medical device maker settles FCA suit for $3.76 million

Atricure Inc., a medical device manufacturer, has agreed to pay the United States $3.76 million to resolve civil claims that it marketed its medical devices for uses that had not been approved by the FDA.

The Dept. of Justice had alleged that the company violated the False Claims Act by promoting its surgical ablation device to treat atrial fibrillation, a use that is not approved by the FDA. Atricure also allegedly promoted heart surgery using the company’s devices when less invasive alternatives were appropriate, advised hospitals to up-code surgical procedures to inflate Medicare reimbursement, and paid kickbacks to health care providers.

Health care benefits company settles FCA suit

Sierra Military Health Services, LLC has agreed to pay $2.2 million to settle allegations that it caused the submission of false claims to TRICARE. TRICARE is the health care program for active duty service members and their families, retired service members and their families, National Guard/Reserve members and their families, survivors and others entitled to DoD medical care.

The Maryland Office of the US Attorney said that Sierra received an administrative fee for administering the TRICARE contract, including payments to subcontractors to assist with the administration of the contract. Sierra, however, did not pay at least one of its subcontractors from its administrative fee. Instead, Sierra and the subcontractor entered into an agreement under which the subcontractor billed TRICARE for its costs by adding its fees into health benefits claims.