Thursday, March 25, 2010

Judge orders Fresenius to pay $19.3 million in qui tam suit

A federal judge in Nashville has found that Fresenius, the parent company of Renal Care Group, violated the False Claims Act, the Nashville Business Journal and the Tennessean reported.

The judge ordered the dialysis supplier to pay $19.3 million for improper claims submitted to Medicare for home dialysis supplies.

Medicare has two rates of payment to dialysis companies. Companies that operate dialysis facilities are supposed to bill Medicare using “Method I.” Renal Care Group was such a company. Companies that don’t operate facilities, but supply patients with at-home supplies, bill Medicare under “Method II,” which pays 30 percent more.

The judge held that the company showed “reckless disregard” for the law by creating Renal Care Group Co., an at-home dialysis supply company that operated as an extension of RCG. The law requires requires suppliers to be independent of the dialysis facilities where patients are treated.

The suit arose from a whistleblower complaint filed under the qui tam provisions of the False Claims Act.

Amendments to public disclosure provision in new health care law

The Patient Protection and Affordable Care Act (Public Law 111-148) includes a provision that clarifies the False Claims Act's definition of "public disclosure."

In section 10104 of the new law is the following provision:

"Section 3730(e) of title 31, United States Code, is amended by striking paragraph (4) and inserting the following:

'(4) (A) The court shall dismiss an action or claim under this section, unless opposed by the Government, if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed—

'(i) in a Federal criminal, civil, or administrative hearing in which the Government or its agent is a party;

'(ii) in a congressional, Government Accountability Office, or other Federal report, hearing, audit, or investigation; or

'(iii) from the news media,

unless the action is brought by the Attorney General or the person bringing the action is an original source of the information.

'(B) For purposes of this paragraph, “original source” means an individual who either (i) prior to a public disclosure under subsection (e)(4)(a), has voluntarily disclosed to the Government the information on which allegations or transactions in a claim are based, or (2) who has knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions, and who has voluntarily provided the information to the Government before filing an action under this section.'"

Monday, March 22, 2010

New Jersey hospital settles qui tam suits involving Medicare outlier payments

Robert Wood Johnson University Hospital Hamilton will pay $6.35 million to settle allegations of Medicare fraud raised in two whistleblower suits, the Dept. of Justice reported. The suits had alleged that the New Jersey hospital fraudulently inflated its charges to Medicare patients to obtain larger reimbursements from the federal health care program.

These charges involved Medicare's "outlier payments." This supplemental reimbursement is paid to health care providers in cases where the cost of care is unusually high. The two lawsuits charged that the hospital inflated its charges to obtain supplemental outlier payments for cases that were not extraordinarily costly and for which outlier payments should not have been paid.

Tuesday, March 16, 2010

Alpharma resolves FCA suit involving Kadian

Alpharma, a subsidiary of King Pharmaceuticals, will pay $42.5 million to resolve allegations that
it improperly marketed the morphine-based drug Kadian.

The Justice Department's press release outlined the alleged violations: paying health care providers to promote or prescribe the drug, and making misrepresentations about its safety and efficacy.

The suit began as a whistleblower action brought under the qui tam provisions of the False Claims Act. The whistleblower, Debra Parks, was represented by Mary Louise Cohen and Tim McCormack of Phillips & Cohen LLP.

The proceeds from the settlement will be split between the federal government and various states.

Stimulus funds oversight board reports on investigations and audits

The Recovery Accountability and Transparency Board has issued its quarterly report, outlining its efforts to prevent fraud, waste and abuse in the use of stimulus funds.

The funds, which were authorized by the American Recovery and Reinvestment Act of 2009, include federal funds for education, health care and entitlement programs; and $275 billion for federal contracts, grants and loans. Recipients of recovery funds are required to report quarterly on how they are using the money.

The report says that there are currently 147 active investigations into the use of stimulus funds. 43 cases have been accepted for prosecution and 5 were referred for alternative resolution.

The Board has also taken steps to improve the quality of the data reported on its website,

Monday, March 01, 2010

Atlanta nursing home chains pay $14 million to settle fraud allegations

The Justice Department announced that Atlanta-based Mariner Health Care Inc. and SavaSeniorCare Administrative Services LLC will pay the U.S. and several states $14 million to settle fraud allegations brought under the False Claims Act.

The suit, originally brought by whistleblower Adam Resnick, alleged that the defendants solicited kickback payments from Omnicare, the nation’s largest pharmacy specializing in dispensing drugs to nursing home patients. In exchange for a payment of $50 million, Mariner and Sava agreed to continue using Omnicare’s pharmacy services for 15 years.

The parties allegedly tried to cover up the kickback by disguising it as a payment to acquire a small Mariner business unit that had only two employees and was worth far less than $50 million.

Mary Louis Cohen and Tim McCormack of Phillips & Cohen LLP represented Mr.Resnick.