Healthcare Fraud

May 12, 2017

Oncology Therapy Center Pays $3 Million in Healthcare Fraud Settlement

A radiation therapy center based in Lancaster agreed to pay $3 million to the federal government to resolve a claim that it committed healthcare fraud for close to 10 years. A qui tam suit based on the federal False Claims Act, filed by former employee Jared Shindler, alleged that Valley Tumor Medical Group submitted fraudulent bills to the federal Medicare, Medi-Cal, and TRICARE programs between Jan. 3, 2006 through Nov. 13, 2015. According to the whistleblower suit, radiation oncology treatments were provided to patients at Valley Tumor’s Ridgecrest location when no physicians were on site, which is required by federal law.

The Case Was Made Public April 20

While the lawsuit was filed in 2015, it was only recently unsealed. That is because qui tam cases are filed under seal so that the government has time to investigate the claim and determine whether to join the suit as a party or decline to join. During this time, the lawsuit must remain a secret from the public, including the defendant. If the relator or government leaks information about the existence of the suit, there can repercussions such as fines or the dismissal of the suit.

May 5, 2017

University of California Discovers Health Care Fraud Targeting Students

by Gregory J. Brod

The University of California recently announced that it uncovered evidence of a fraudulent health care scheme targeting students. Local health care providers would recruit and encourage students to enroll in fake clinical trials or apply for fake jobs. This allowed them to gain the student’s personal and health plan information. These providers would then write fake prescriptions in the student’s names to ultimately obtain close to $12 million from UC. The university found at least nine individual health care providers were involved.

UC Filed Complaint in Los Angeles County

UC filed a complaint against the allegedly fraudulent health care providers on April 20 in the Los Angeles County Superior Court. Listed as defendants are California Clinical Trials, LLC, Studios Pharmacy, Excel Care Pharmacy, Pharma Pro Solutions, and 17 individuals, including physicians, surgeons, pharmacists, nurse practitioners, physician assistants, and other medical professionals.

April 28, 2017

California Dermatologist Settles Qui Tam Claim With Federal Government

by Gregory J. Brod

The federal government has once against settled a qui tam claim based on the False Claims Act (FCA) with a medical provider. In April, the government announced it came to an agreement with dermatologist and surgeon Dr. Norman A. Brooks, M.D., for $2,681.400 based on false billings to Medicare. Dr. Brooks owns a medical facility in Encino, California. The federal government continues to aggressively enforce the FCA and health care providers are a main target. Fraudulent claims to Medicare and Medicaid are unfortunately common and can unlawfully keep millions of dollars from the federal government.

Qui Tam Claim Against California Dermatologist

Dr. Brooks’ former employee Janet Burke brought the qui tam lawsuit under the FCA against the physician. Burke alleged that Dr. Brooks would falsely diagnose patients with skin cancer in order to bill Medicare for services and Mohs surgeries he unnecessarily performed. Mohs micrographic surgery is a procedure to remove certain types of skin cancers in certain areas of the body. It is known as the best way to remove Basil Cell Carcinoma and Squamous Cell Carcinoma. It leaves behind the greatest amount of healthy tissue. Dr. Brooks would invoice for this type of surgery because it was more costly and returned a higher reimbursement than other procedures for removing skin cancer or lesions.

April 7, 2017

Government Allowed Writs of Attachment and Garnishment Against Defendants in Qui Tam Cases

by Gregory J. Brod

In the qui tam case of BlueWave Healthcare v. U.S., the government was allowed to execute writs of attachment against both real and personal property and writs of garnishment against bank accounts of the defendants under the Federal Debt Collection Procedures Act (FDCPA). The defendant’s attempted to appeal the denial of their motions to quash these writs, but this appeal was dismissed for lack of jurisdiction.

About the Case

The qui tam case was filed by Scarlett Lutz and Kayla Webster against BlueWave HealthCare Consultants, Robert Bradford Johnson, and Floyd Calhoun Dent in 2014. Lutz and Webster, the relators, alleged that the defendants had violated the Anti-Kickback Statute and the False Claims Act. They stated that the defendants arranged for illegal kickback payments to doctors, which were labeled processing and handling fees. The federal government intervened in the case in April of 2015.

March 24, 2017

DOJ Investigating How Much Large Health Insurers Charge Medicaid

by Gregory J. Brod

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Based on documents from a qui tam lawsuit filed against numerous health insurance companies, it is clear that the U.S. Department of Justice is looking into allegations that major health insurers in the U.S. are overcharging Medicare. These insurers include UnitedHealth Group Inc., Health Net Inc., Aetna Inc., and Bravo Health Inc., which is part of Cigna Corp. You may recognize these as some of the largest insurance providers in the country. The U.S. has agreed to join the qui tam suit against UnitedHealth and declined to intervene in cases against the other insurers. However, the government has stated it will continue its investigation into the allegations against these other insurers separately.

The Beginning of this Qui Tam Action

The qui tam action based on the False Claims Act was filed by Benjamin Poehling in 2011. Poehling was previously an executive at UnitedHealth and alleges that major health insurers overstate how sick Medicare patients are to increase reimbursements by millions of dollars. Through the program known as risk adjustment or risk scoring, healthcare providers would state that numerous Medicare patients under Part C and Part C programs were treated for conditions they did not have or had, yet were not treated for – also known as upcoding. These particularly costly conditions that were coded increased a provider’s risk score and in turn, raised reimbursements from the government.

March 3, 2017

Recent Qui Tam Decisions Around the U.S.

by Gregory J. Brod

Each week new qui tam suits, possible under the False Claims Act (FCA) are brought by private individuals against other individuals and businesses on behalf of the federal government. Many of these lawsuits take years to investigate and litigate. Additionally, each week sees some of these cases settled, finalized, or appealed. Here are a few cases that wrapped up this past week:

In February, a physician’s practice in Florida agreed to settle a FCA claim based on Medicare fraud for $750,000. The qui tam suit against Dr. Paul B. Tartell was filed by a former patient Theodore Duay. Duay alleged that Tartell would bill Medicare and the Federal Employee Health Benefits Program for procedures that were not medically necessary or not performed at all. Numerous federal agencies were involved in negotiating this settlement, and Duay will receive $135,000 for filing the action.
TeamHealth Holdings will pay $60 million plus interest due to allegations its business, IPC Healthcare Inc., committed fraud against Medicare, Medicaid, the Defense Health Agency, and the Federal Employees Health Benefits Program by billing for more expensive medical services than what were actually provided. Dr. Bijan Oughatiyan filed a qui tam action under the FCA alleging the practice of “upcoding.” The federal government investigated and chose to intervene, providing a detailed description of how IPC Healthcare used false codes to receive greater reimbursements. Oughatiyan will receive $11.4 million for his participation.

January 9, 2017

DOJ Recovers a Record Amount under False Claim Act and Qui Tam Cases

by Gregory J. Brod

Between Oct. 2015 and Sept. 2016, the Department of Justice (DOJ) won more than $4.7 billion in judgements and settlements from civil fraud and false claims against the government, a DOJ press release stated. This recovery is from cases brought under the False Claims Act (FCA), including qui tam claims in which a whistleblower brings to light a fraud being perpetrated against the government. The amount is particularly important to note since it is the third highest recovery for a fiscal year since the FCA was enacted. It is also crucial in the sense that it confirms the effectiveness of qui tam cases and other claims brought under the FCA. The legal protections and incentives for whistleblowers to come forward enables the government to stop fraudulent schemes and return funds back to programs that support low-income families, veterans, and the elderly.

Fraud is Common within the Health Care Industry

Fraudulent claims within the health care industry cost the government billions of dollars. The DOJ reported $2.5 billion was recovered for the federal government in relation to this sector from hospitals, physicians, nursing homes, labs, medical device companies, and drug companies during the 2016 fiscal year. Additionally, a total of $19.3 billion has been won in health care fraud claims since January 2009. The recovered funds go back to federally funded medical programs such as Medicare, Medicaid, and TRICARE.

October 30, 2016

Research Hospitals Becoming New Target for False Claims Act Actions

by Gregory J. Brod

The False Claims Act is a federal statute designed to be used by whistleblowers who expose government fraud and waste. The whistleblower seeking to expose this type of deceit and corruption files a private lawsuit seeking to assert the rights to compensation for the government. Regardless of whether the government joins the suit and assists in the prosecution of the case, the successful whistleblower is permitted to recover a portion of the amount of funds he or she is able to recover for the government.

Those entities most likely to find themselves the target of a False Claims Act suit are private doctors’ offices and other healthcare providers who accept patients with Medicare and Medicaid. In recent years, however, there has been an increasing number of FCA suits filed against a new defendant – the university hospital.

Examples of FCA Claims Against Research and University Hospitals

August 22, 2016

Government Fraud Whistleblowers’ Law Firm Examines the Continuing Commitment to Fighting Fraud

by Gregory J. Brod

It is no secret that, as a whistleblower’s law firm, we are big fans of the False Claims Act (“FCA” or “the Act”). The Act holds liable any person/entity that presents a false or fraudulent claim for payment to the federal government (or an agency thereof) and/or create false records to that end. In essence, it forbids overcharging the government for goods or services or charging for goods/services that are never delivered. The Act’s qui tam provision is particularly powerful since it enables private individuals to bring suits on the government’s behalf. This is key because it is often private parties, rather than the government itself, who are aware of these fraudulent schemes. Recent trends show that the legislature and the courts are committed to working with whistleblowers and, more generally, to using the False Claims Act as a powerful tool to battle health care fraud and other forms of fraud on the U.S. government.

DOJ Nearly Doubles Per Claim False Claims Act Penalties

As Becker’s Hospital Review, a healthcare industry journal, reported last month, the Department of Justice (“DOJ”) recently published an interim final rule substantially increasing the monetary penalty for violations of the FCA. Previously, penalties ranged from $5,500 to $11,000 per claim. The new penalties nearly double the old ones and range from $10,781 to $21,563. These increased penalties took effect on August 1 and only apply to violations occurring after November 2, 2015. The increase was made pursuant to the Bipartisan Budget Act of 2015 which required agencies to increase FCA penalties and authorized rulemaking to implement a “catch up adjustment” to account for inflation. The DOJ is just one of the agencies updating penalties (the Railroad Retirement Board was the first), but it is certainly among the most impactful.

August 15, 2016

Lessons from a False Claims Act Ruling on Medicare Pricing and the “Usual and Customary” Price

by Gregory J. Brod

We pride ourselves on our work helping whistleblowers bring claims pursuant to the False Claims Act. As a False Claims Act law firm, we have specialized knowledge of this complex piece of legislation that empowers individuals to bring fraud claims on behalf of the government. A ruling from a federal district court released in late Spring in a case alleging Medicare fraud looks at one of the many important details that come up in these cases. More specifically, the case looks at what constitutes a “usual and customary” price for purposes of determining whether a provider is complying with the law and offering Medicare beneficiaries an appropriate price on prescription drugs. In doing so, the court highlights one important requirement that is often subverted by perpetrators of fraud and also provides a reminder of how complex False Claims Act cases can be.

Background on the Garbe Case

On May 27, 2006, the Seventh Circuit Court of Appeals released an important ruling in United States ex rel. Garbe v. Kmart Corporation, a False Claims Act case brought by James Garbe on behalf of the United States against Kmart. According to the complaint, Garbe, a pharmacist at Kmart, noticed that another pharmacy charged his Medicare Part D insurer substantially less that Kmart typically charged insurers for the same prescription. He investigated and found that Kmart routinely charged customers paying out of pocket less than it charged those paying with insurance (public or private). He also found that most cash customers took part in Kmart’s “discount programs” and that this discount price was not included when Kmart calculated its “usual and customary” prices on generic medications for purposes of Medicare reimbursement.