New Jersey Hospital Pays $7.5 Million for Medicare Fraud

Warren Hospital of  Phillipsburg, New Jersey, agreed to pay $7.5 million to the government for Medicare fraud. DOJ alleged that “Warren purposefully inflated charges for inpatient and outpatient care to make these cases appear more costly than they actually were, and thereby obtained outlier payments from Medicare that it was not entitled to receive.” Warren also was accused of violating the Stark laws “by submitting claims for Medicare patients referred by physicians with whom it had a unlawful financial relationship.” http://www.usdoj.gov/usao/nj/press/press/files/pdffiles/warr1210rel.pdf  

Two whistleblowers shared $1.2 million, or 16% of the recovery.

Arizona Hospital pays $5.8 million to settle Medicare Fraud claims

Source: http://www.surgicenteronline.com/hotnews/7ch10155123.html

CHARLOTTE, N.C. — MedCath Corporation (Nasdaq: MDTH) announced today that ArizonaHeartHospital, one of the 11 hospitals in which MedCath owns an interest, has entered into a settlement with the United States Department of Justice (the DOJ) and the United States Attorneys’ Office in Phoenix under the federal Civil False Claims Act.

The settlement concerns Medicare claims submitted between June 1998 and October 2002 for physician services involving the implantation of certain endoluminal graft devices (utilized to treat aneurysms) that had not received final marketing approval from the Food and Drug Administration, and allegedly were either implanted without an approved investigational device exception (IDE) or were implanted outside of the approved IDE protocol. The DOJ’s allegations related solely to whether the procedures were properly reimbursable by Medicare; quality of patient care was not an issue.

The parties reached a settlement of the allegations to avoid the delay, uncertainty, inconvenience, and expense of protracted litigation. Further, the hospital denies engagement in any wrongdoing or illegal conduct, and the settlement agreement does not contain any admission of liability. As previously disclosed in MedCath’s filings with the Securities and Exchange Commission, the hospital will pay approximately $5.8 million to settle and obtain a release from any civil or administrative monetary claims related to the DOJ’s investigation. Additionally, the hospital has entered into a five-year corporate integrity agreement with the Office of the Inspector General of the Department of Health and Human Services under which the hospital will continue to maintain its existing corporate compliance program and which relates to clinical trials conducted at the hospital.

Source: Lorin E. Patterson, Reed Smith and MedCath Corp.

Lawyer sued under False Claims Act

The DOJ has filed a false claims act suit against the former general counsel for Tenet Healthcare, previously known as National Medical Enterprises, Inc. Just last week Thomas F. O’Neil III and Melinda H. Waterhouse
of DLA Piper LP posted an excellent summary of the case.   <<http://lawfuel.com/show-release.asp?ID=16358>>

Tenet already has paid $920 million as a result of a qui tam whistleblower suit for Medicare fraud. In this suit, the DOJ is asking that the lawyer personally pay tens of millions of dollars. 

An NME executive wrote a memo suggesting that NME’s contracts with doctors violated the Stark Act.  The Stark Act is aimed at preventing kickbacks when patients are referred to a physician.  The theory behind the Stark Act is that the kickbacks ultimately get passed along to the consumer, and thus to Medicare and Medicaid.

The suit claims that the general counsel hired an outside law firm, which issued a report saying NME’s contracts with the doctors did in fact violate the Stark Act.  Nonetheless, it suggests, four days later the general counsel certified that NME was in compliance with the law, and she certified compliance again one year later.  She did ask another employee to take the corrective measures that the outside firm had suggested, but, per the suit, apparently she never followed up. 

I’ve been saying all along that healthcare professionals, billing department employees, nurses, etc., have got to protect themselves.  In a corporate environment, it’s easy to buy into “group think” – the company makes all the decisions, you just do what you’re told to do.  But this case certainly makes it clear how dangerous an assumption that is.  Nobody in the healthcare field, regardless of whether they are giving direct medical care, should make that assumption.  If you know about fraud, don’t put yourself in a spot to take the heat for it. 

Department of Defense Inspector General finds Contractor Fraud in Iraq

It appears that qui tam and whistleblower cases in the Department of Defense area are bound to take off.

The DOD Inspector General has issued a report on what it calls “challenges” to keeping up with the supplies for our troops and for distribution in Iraq. 

http://www.dodig.mil/Audit/reports/fy08/08-026.pdf

The IG said it had “identified a large amount of equipment that was unaccounted for,” but that “it would not be feasible or prudent to request MNSTC-I to continue to try to account for that equipment.”  But it’s the specifics that tell the tale – like the fact that they couldn’t account for 12,712 of 13,508 weapons that were supposed to be delivered. And like this terrifying sentence: “We were unable to identify an audit trail for 99 percent of equipment MIPRs, worth $438.2 million.”

Yikes!  You like to think that it was just a matter of poor procedure controls – that none of these weapons walked off into enemy hands, and that none of the suppliers took advantage of the confusion to ship just part of what they had promised.

But how can you know?  And that’s the point of the report. 

In her blog, Dina Rasor reminds us of the fraud that came to light in the 1980’s.  http://www.huffingtonpost.com/dina-rasor/outraged-at-the-billion-d_b_75707.html

Good point.  Who could forget the $600 toilet seats?

As an interesting aside, I tried to find out just how much those toilet seats did cost.  I gather that the story has moved into the halls of urban myth by now, because folks cite prices from $600 to $40,000.  Either way, it’s more than I pay at Home Depot.

But back to the question – who could forget the toilet seats?  We could, that’s who. 

Let’s hope there are some folks out there who will blow the whistle if fraud did occur.  I personally don’t want to pay my tax share of $438.2 million. 

Northern District of Georgia recovers 14.1 million from civil debtors in fiscal year 2007

According to the United States Attorney for the Northern District, David E. Nahmias, the government recovered $14.4 million from civil debtors in fiscal year 2007 (which ended on September 30, 2007). 

Some of the larger collections were: the Morehouse Medical Associates, Inc. settlement ($1.525 million); the Northside Hospital qui tam settlement ($6.3 million) and the collection matter of United States v. David T. Kent ($500,000). 

Federal government recovers $1.45 billion thanks to whistleblowers who protect the government against fraud

According to a press release issued by the Department of Justice, in 2007, the United States recovered $1.45 billion in suits initiated by whistleblowers under the False Claims Act's qui tam provisions. 

Relators were awarded $177 million for their work in stopping fraud against the United States government.  Whistleblower relators get 15 to 25 percent of the proceeds if the United States intervenes, and up to 30 percent if the United States declines and the relator pursues the action alone. 

Peter D. Keisler, Acting Attorney General and Assistant Attorney General for the Civil Division, said: “It also attests to the fortitude of whistleblowers who report fraud and the tireless efforts of the civil servants who investigate and prosecute these cases.”

Health care fraud accounted for the largest percentage of the judgments -- $1.54 billion. “This number includes both whistleblower claims and those initiated by the United States in independent fraud investigations.”  The biggest recoveries were for fraud against the Department of Health and Human Services, largely under Medicare and Medicaid programs. The government also recovered for fraud against the Office of Personnel Management, which administers the Federal Employees Health Benefits Program, the Department of Defense for its TRICARE insurance program, the Department of Veterans Affairs, and others.

http://www.usdoj.gov/opa/pr/2007/November/07_civ_873.html

Bristol-Myers Squibb Co., Aventis Pharmaceuticals, Inc., Medco Health Solutions, Inc., Purdue Pharma L.P. and Purdue Frederick Co., and InterMune, Inc. paid more than $800 million of the $1.5 billion.  State Medicaid programs also recovered $264 million for pharmaceutical fraud.

The government touted its “Department-wide effort” to stop fraud in the pharmaceutical industry. “Typical allegations involve illegal promotion of drugs or devices and causing the government to pay for uses that were neither found by the Food and Drug Administration to be safe and effective, nor supported by the medical literature, also known as “off-label” marketing; paying kickbacks to physicians, wholesalers, and pharmacies to induce drug or device purchases; establishing inflated drug prices knowing that federal health care programs use these prices to reimburse providers, then marketing the “spread” between the federal reimbursement and the provider’s lower cost to induce drug purchases; and failing to report the company’s true “best price” for a drug to reduce rebates owed to the Medicaid program.”  http://www.usdoj.gov/opa/pr/2007/November/07_civ_873.html

Recoveries for other agencies:

Department of Defense: $48.4 million 

General Services Administration: 

Burlington Resources, Inc., a subsidiary of Conoco Phillips, paid $105.3 million based on claims that it had underpaid natural gas royalties to the Department of Interior. Oracle Corporation paid $98.5 million to resolve allegations that PeopleSoft, Inc. (acquired by Oracle in 2005) engaged in defective pricing of its software and services under the company’s multiple award schedule with GSA. Mellon Bank, N.A. paid $34.6 million to settle claims that it violated its contract with the Internal Revenue Service to process individual income tax returns and payments.

Trials:

The Department of Justice tried two whistleblower cases, and won both. 

(1) $172 million judgment against Amerigroup, Illinois Inc.   Whistleblowers alleged that Amerigroup’s HMO in Illinois illegally increased its profits by discriminating against pregnant women and individuals with pre-existing medical conditions when enrolling Medicaid-eligible applicants.  Amerigroup is appealing. 

(2) $90 million judgment against several companies for conspiring to rig bids on contracts financed by the U.S. Agency for International Development for the construction of wastewater treatment facilities in Cairo, Egypt.

http://www.usdoj.gov/opa/pr/2007/November/07_civ_873.html