Healthcare Fraud Lawyer Blog

June 2, 2017

Whistleblower Cannot Intervene in Later FCA Suit Filed by US

The Ninth Circuit recently held that a whistleblower could not intervene in a False Claims Act (FCA) suit filed by the U.S. despite it being based on allegations the whistleblower previously made in a lawsuit that was dismissed. This is another a holding that shows relators in qui tam cases do not get second chances. If the FCA cases to which they are a party do not directly lead to a settlement or jury award, the whistleblowers cannot recover any compensation.

Background for the Decision

In 2009, John Prather filed a qui tam action against Sprint and others stating the businesses overcharged the U.S. for wiretapping services. As in all qui tam cases, the U.S. government has time to investigate the allegations and then choose whether to intervene and become a formal party to the case or not intervene. In this case, the U.S. did not intervene and later the district court dismissed the relator’s claim because it determined he was not an original source for the information that led to the allegations.

May 26, 2017

CareCore National, LLC to pay $54 Million for Fraudulently Overbilling

by Gregory J. Brod

CareCore National, LLC and the U.S. Department of Justice entered into a settlement agreement, according to a May announcement. CareCore will pay $54 million to resolve a False Claims Act suit based on allegations it fraudulently billed government insurance programs. The business provides pre-authorization/pre-certification services to managed care plans. It determines whether diagnostic testing is medically reasonable and necessary for patients and should be paid for by health insurers. However, the allegations brought by a previous employee stated that CareCore did not follow its protocol and directed nurses to move forward with medical services that were not reviewed or medically necessary. This caused hundreds of thousands of inappropriate and unnecessary diagnostic tests to be approved and billed to Medicare and Medicaid.

Why the Whistleblower Came Forward

CareCore’s previous employee, John Miller, a licensed practical nurse, filed the qui tam suit against the business on behalf of the government. Miller acted as a clinical reviewer for the company and was required to assess whether a medical procedure met certain criteria for being approved. If the service was necessary and appropriate, it would be submitted to the insurance company for payment. Due to the high demand for its services, CareCore could not keep up. In response to the demand, it created the program known as Process As Directed (PAD). Through this program, clinical reviewers like Miller automatically approved prior authorization requests without a physician performing an independent review. This enabled CareCore to return more pre-authorization requests in a shorter period of time. PAD ultimately led to more than 200,000 deceptive authorizations between 2005 and 2013. Medicare and Medicaid paid for many of these unnecessary and fraudulently approved tests.

May 19, 2017

Omnicare to Pay $8 Million FCA Settlement

by Gregory J. Brod

The U.S. Department of Justice and CVS Health Corp.’s Omnicare Inc. have settled a suit based on the federal False Claims Act for $8 million. Omnicare is the country’s largest nursing home pharmacy. It was formed in 1981 and acquired by CVS Health in 2015. Prior to this takeover, the U.S. Federal Trade Commission blocked Omnicare’s hostile takeover of competitor PharMerica. Had Omnicare purchased the business, it would have had 57% of the market share for long-term-care pharmacies. The most recent FCA settlement with the federal government is one in a long line of settlements based on fraudulent and unlawful claims to federal programs.

Omnicare’s Most Recent FCA Settlement

In a qui tam brought by Elizabeth Corsi and Christopher Ezzie in February 2014, it was alleged that Omnicare created and implemented an automated label verification system, which utilized a less specific drug code, “MEDID,” during the automated Stage II pharmacist verification process instead of a more specific National Drug Code (NDC). The result of this system was that the company submitted claims to Medicare and Medicaid for generic drugs different than those actually dispensed to patients. This created false claims to the federal government. The patient’s medication labels also had incorrect manufacturer or NDC information. Because of these issues, Omnicare could not properly track medication information or, if necessary, conduct a patient-level recall on drugs, putting patient safety at risk.

May 12, 2017

Oncology Therapy Center Pays $3 Million in Healthcare Fraud Settlement

by Gregory J. Brod

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 21, 2017

FCA Civil Penalties Rose in 2016, Increasing Financial Risk for Defendants

by Gregory J. Brod

Individuals and businesses named in qui tam lawsuits alleging fraud against the government based on the False Claims Act (FCA) have always been at risk for significant financial penalties. If the federal government decides to join the qui tam action against the defendants, this is a sign of a great deal of evidence in the government’s favor. A court ruling against some or all of the defendants or a settlement between them and the government is bound to follow. However, since mid-2016, the financial risk for these defendants has been even higher as the minimum and maximum civil penalties increased. Along with continued enforcement, this could mean the U.S. receives an even greater amount from FCA cases in the 2017 fiscal year.

FCA Claims are Taken Seriously

Under the Obama Administration, qui tam and FCA claims were taken seriously. The U.S. Department of Justice (DOJ) recovered more than $4.7 billion from FCA cases in the 2016 fiscal year. As we transition into the Trump Administration and Attorney General Sessions gets to work, it appears as if heavy FCA enforcement will continue. Democrats and Republicans both agree with finding and prosecuting fraud against the government, and Sessions has agreed he will make recovering fraudulently obtained monies a high priority.

April 14, 2017

Understanding the Qui Tam Legal Process

by Gregory J. Brod

Qui tam claims are lawsuits filed by private citizens on behalf of the federal government based on allegations that someone violated the False Claims Act (FCA) or another federal statute. Most of the time these types of claims are brought by employees, or ex-employees, who were able to gather evidence of false claims made by their employer to the government. Qui tam cases are complicated, and it is crucial that you, as a whistleblower, work with an experienced California qui tam lawyer and understands the legal process you are about to undergo.

If you believe you have evidence of fraud against the government, call the Brod Law Firm to learn about what to do next.

An Overview of the Qui Tam Process

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 31, 2017

Former Whistleblower Denied Portion of Government Settlement

by Gregory J. Brod

Vinod Khurana alleged he should receive part of a $500 million settlement agreement between Science Applications International Corp. (SAIC), New York City, and the Southern District U.S. Attorney’s Office since he was a whistleblower who informed the government of SAIC’s fraudulent billing and record-keeping system. However, the court denied this claim stating that Khurana was not a valid qui tam relator in relation to the settlement. Therefore, he had no right to a portion of the agreement as if it were the government’s alternate remedy.

Khurana’s History with SAIC

Khurana was a software engineer with Spherion, a quality assurance company that was hired to review SAIC’s records and billing on the CityTime system, which was used to track municipal workers’ hours. By working with CityTime, Khurana discovered that SAIC managers had a fraudulent billing and record-keeping system that made them money. He claims his bringing forward information about this fraud between 2004 and 2007 was what led to his dismissal in 2007.