St. Jude Medical Inc., a heart device manufacturer, Parma Community General Hospital (PCGH); and Norton Healthcare (Norton) paid the federal government approximately $3.89 million to resolve false claim allegations that St. Jude paid illegal kickbacks to the two hospitals to secure heart-device business, the U.S. Department of Justice (DOJ) announced June 4, 2010. The government alleged these kickbacks caused false claims to be submitted to Medicare and other federal healthcare programs in violation of the False Claims Act. According to the
government, the kickbacks included alleged rebates that were "retroactive" and paid based on a hospital’s previous purchases of St. Jude heart-device equipment and rebates that St. Jude paid for purchases of heart-device equipment sold by its competitors to induce purchases of similar equipment from St. Jude in the future. Under the settlement agreement, St. Jude will pay $3,725,000, PCGH will pay $40,000, and Norton will pay $133,300. This case was initiated by a whistleblower filing a qui tam action, and the federal government subsequently intervened.
The Health Alliance of Greater Cincinnati, two of its member hospitals (The Fort Hamilton Hospital (FHH) and The University Hospital), and physician group University Internal Medicine Associates Inc. (UIMA) agreed to pay the federal government $2.6 million to settle claims that they engaged in an illegal kickback- for-referral scheme, the Department of Justice (DOJ) announced June 15, 2010. The alleged scheme involved FHH’s plans to expand the scope of its cardiology services to include certain interventional cardiology procedures. However, under state law, FHH could only perform the interventional cardiology procedures if it participated in a particular clinical trial involving those procedures. According to DOJ, UIMA, a physician group based at The University Hospital, offered to provide the interventional cardiology coverage that FHH needed for the clinical trial, but only if the hospital agreed to refer cardiology patients and procedures to the physician group on a preferential basis. The government contended that the preferential referral arrangements sometimes resulted in patients being
transferred to The University Hospital, or being seen by cardiologists with UIMA, rather than the hospital or cardiologist that the patient chose. These
arrangements, according to the government, violated the federal Anti-Kickback Statute, and therefore the related claims submitted to Medicare violated the False Claims Act. The case was initiated as a qui tam lawsuit brought by whistleblower Dr. Deborah Hauger, a former cardiologist at FHH. As part of the settlement, Dr. Hauger will receive $468,000, DOJ said.
DOJ announced June 4, 2010 that Metropolitan Ambulance & First Aid Corp. (now known as SEZ Metro Corp.), Metro North Ambulance Corp. (now known as SEZ North Corp.) and Big Apple Ambulance Service Inc. (formerly known as United Ambulance) paid the federal government $2.85 million to resolve allegations that they submitted millions of dollars in false claims to the Medicare program. As part of the settlement, the government stipulated to the dismissal of the False Claims Act qui tam suit against the companies, including their president, Steve Zakheim. According to the government, the companies and Zakheim used, or caused the use of, falsified records to appeal a Medicare program refund demand. Medicare had demanded the companies return millions of dollars they were paid for medically unnecessary ambulance trips. Under Medicare rules, the companies could bill for these expensive non-emergency transports only if the patient could not be transported by any other means, such as by car or by wheelchair van. Medicare audited the companies’ past billings and concluded that the companies had charged Medicare tens of millions of dollars for ambulance trips that did not meet this standard. Medicare demanded a refund and afforded the companies an extensive informal and formal appeals process to prove that their billings were proper. The government also alleged that, rather than contesting the refund demand fairly, the companies resorted to fraud when they could not otherwise prove an ambulance was medically needed. The companies, in pursuing their appeals, used hundreds of letters attesting to the need for an ambulance that were forged or otherwise purported to come from some neutral, disinterested healthcare provider when they in fact did not, the government alleged. The case was initiated as a qui tam suit by whistleblower Larry Kaplan, who formerly was a Chief Financial Officer for one of the companies. Under the settlement, Mr. Kaplan will receive $618,450 as his share of the recovery.
Drug maker AstraZeneca has agreed to pay $103 million to settle allegations that it inflated the Average Wholesale Price for some of its drugs asserted in a class action brought on behalf of consumers and third-party payors, consumer-rights class-action law firm Hagens Berman Sobol Shapiro announced June 19, 2010. The proposed settlement, filed June 18 in the U.S. District Court for the District of Massachusetts, provides $13 million for TPPs who paid some or all of their insured
Medicare co-insurance for Zoladex and/or Pulmicort Respules in Massachusetts and consumers and TPPs who paid cash or a co-payment for these drugs outside of Medicare in the state, according to Hagens Berman. In addition, AstraZeneca has agreed to pay $90 million to class members in the U.S. but outside of
Massachusetts who purchased these drugs and fit the same class description. The proposed settlement still requires court approval. AstraZeneca denied any liability or wrongdoing and said it agreed to settle “to avoid further expense, burden, and inconvenience of protracted litigation.”
A physician-owned enterprise based in the Chicago, IL area has agreed to a $7.3 million Civil Monetary Penalty (CMP) settlement to resolve allegations of anti- kickback violations, the Department of Health and Human Services Office of Inspector General (OIG) announced in a July 8, 2010 press release. The government alleged that United Shockwave Services, United Prostate Centers, and United Urology Centers (collectively, United) and certain of its physician- owners, leveraged patient referrals to obtain contract business from hospitals in Illinois, Indiana, and Iowa. OIG also alleged that United caused certain hospitals to submit claims for designated health services that resulted from prohibited referrals in violation of the Physician Self-Referral Law, the release said. In addition to the monetary settlement, United entered into a five-year Corporate Integrity Agreement (CIA) with OIG, which requires the enterprise to hire an Independent Review Organization. The independent reviewer will monitor lithotripsy and laser arrangements between United and any hospital in Illinois, Iowa, and Indiana that receives referrals from United or its physician investors, according to the release.
The joint DOJ-HHS Medicare Fraud Strike Force announced charges July 16 against 94 individuals for their alleged participation in schemes to collectively submit more than $251 million in false claims to the Medicare program. The operation was the largest federal healthcare fraud takedown since Medicare Fraud Strike Force operations began in 2007, DOJ said in a press release. The charges are based on a variety of fraud schemes, including physical therapy and
occupational therapy schemes, home healthcare schemes, HIV infusion fraud schemes, and durable medical equipment (DME) schemes. According to court documents, the various defendants participated in schemes to submit claims to Medicare for treatments that were medically unnecessary or were never provided. Teva Pharmaceuticals and its corporate affiliates entered into a $27 million
settlement agreement with the state of Florida to resolve claims of allegedly engaging in a practice of knowingly setting and reporting inflated prices for medications dispensed by pharmacies and other providers who were then reimbursed by the Medicaid program, announced Florida Attorney General Bill McCollum on July 20, 2010. Under that settlement agreement, Teva must pay the states of Texas, Florida, and California, and the federal government a total of $169 million. The Medicaid program sets the reimbursement rates it pays to Medicaid providers based upon the prices reported by drug manufacturers. By allegedly reporting inflated prices, Teva and its corporate affiliates caused Medicaid to overpay millions of dollars in pharmacy reimbursements. The case was originally filed as a qui tam lawsuit by whistleblower Ven-A-Care of the Florida Keys, Inc., and the state subsequently intervened.
Allergan Inc. will pay $600 million to resolve allegations that it illegally marketed Botox® Therapeutic from 2000 to 2005 for uses not approved by the Food and Drug Administration (FDA), DOJ announced September 1, 2010. Under the
settlement, Allergan will plead guilty to criminal misdemeanor misbranding in violation of the Food, Drug, and Cosmetic Act and pay a fine of $375 million, including forfeiting assets of $25 million. In addition, Allergan will pay $225 million to the federal government and the states to resolve three whistleblower actions alleging its marketing practices caused the submission of false claims to public healthcare programs. The civil lawsuits, filed in a Georgia federal district court, alleged, among other things, that Allergen illegally promoted Botox for off- label uses, paid physicians kickbacks to prescribe Botox, and instructed physicians on coding Botox claims so as to obtain Medicare and Medicaid
reimbursement. The whistleblowers who initiated the qui tam lawsuits under the False Claims Act stand to receive $37.8 million of the settlement amount, with $210,250,000 going to the federal government and $14,750,000 to states that opt to participate in the agreement. In a September 1 press release, Allergan specifically denied liability for the civil allegations and said it did “not believe there is merit to them factually or legally.” The FDA has approved Botox, which is commonly known as a wrinkle treatment, for use in treating crossed eyes, involuntary eyelid spasms, involuntary neck spasms, excessive underarm sweating, and most recently adult upper-limb spasms. But the government alleged Allergan actively promoted Botox for a number of unapproved indications, including to treat headaches, pain, and juvenile cerebral palsy. Allergan also agreed to enter into a five-year corporate integrity agreement with the Department of Health and Human Services Office of Inspector General.
Saint John’s Health Center (St. John’s), located in Santa Monica, CA, agreed to pay the United States $5.25 million to resolve allegations that the hospital
submitted false, inflated claims to the Medicare program over a seven-year period for “outlier payments,” which are designed to compensate hospitals for high-cost patients, announced U.S. Attorney for the Central District of California André Birotte Jr. on August 25, 2010. The federal government alleged that St. John’s engaged in “turbocharging,” defined in the case as dramatically increasing the charges billed to Medicare for care provided to hospital inpatients far in excess of any increase in the costs associated with that care. The government alleged this billing practice enabled St. John’s to obtain significant amounts of Medicare outlier payments that it was not entitled to receive. In the settlement agreement, St. John’s agreed to resolve the allegations through payment of the $5.25 million without an acknowledging any wrongdoing.
WellStar Health Systems (WHS) reached a $2.74 million civil settlement with the state of Georgia to resolve allegations that it overbilled Medicaid for inpatient and outpatient services provided at five area hospitals, announced Georgia Attorney General Thurbert E. Baker August 30, 2010. State investigators conducted an audit focusing on WHS’ billing practices in relation to “cross-over” claims, which are claims made for patients who are enrolled in both Medicare and
Medicaid. Medicare acts as the primary coverage, with Medicaid functioning as the secondary insurance, and Medicaid has a cap on the amount of reimbursement that a hospital can receive. According to the release, the investigation found WHS filed claims that did not reflect the full amount of Medicare prior payments, allowing WHS to receive excessive Medicaid reimbursements. Under the terms of the settlement agreement, WHS and the five hospitals denied any wrongdoing, but agreed to pay the Georgia Department of Community Health a lump sum of $2,728,318 to settle all possible claims related to the billing errors.
North Shore-Long Island Jewish Health System, Inc., North Shore University Hospital, and Long Island Jewish Medical Center (collectively, North Shore-LIJ), which is the largest integrated healthcare network in New York, agreed to pay the federal government $2.95 million to settle false claims allegations based on billing Medicare Part A for costs that were not incurred in providing Medicare Part A
services, announced U.S. Attorney for the Southern District of New York Preet Bharara on September 7, 2010. According to the complaint, the government alleged that, over a six-year period, North Shore-LIJ, among other things, billed Medicare for expenses associated with operating private physician offices and a pre-school. However, Medicare Part A only reimburses hospitals for the costs of care for Medicare patients, such as the elderly and the disabled. In addition, the federal government alleged that, to obtain reimbursement for costs that were not incurred in providing Medicare Part A services, North Shore-LIJ provided the government with false information and falsely certified compliance with Medicare rules and regulations.
Forest Pharmaceuticals Inc., a subsidiary of Forest Laboratories Inc., agreed to pay more than $313 million to settle potential civil and criminal liability stemming from alleged false claims related to its drugs Levothroid, Celexa, and Lexapro, DOJ announced September 15, 2010. Forest also agreed to plead guilty to one criminal felony count of obstructing justice, one criminal misdemeanor count of distributing an unapproved drug in interstate commerce, and one criminal misdemeanor count of distributing a misbranded drug in interstate commerce, DOJ said. Under the plea agreement, Forest Pharmaceuticals will pay a criminal fine of $150 million and will forfeit an additional $14 million in assets. According to the criminal information, orally administered levothyroxine sodium drugs have been on the market to treat hypothroidism since the 1950s without Food and Drug Administration (FDA) approval. In 1997, FDA announced that these drugs were “new drugs” under the Food, Drug and Cosmetics Act and needed the agency’s approval. Eventually, to meet continuing patient demand, FDA
announced that, as a matter of enforcement discretion, the agency would permit manufacturers of unapproved levothyroxine sodium drugs to continue distributing their unapproved drugs under certain conditions. One of those conditions was that any manufacturer that had not obtained approval for its levothyroxine sodium drug product needed to comply with a two-year, gradual distribution phase-down of its unapproved drug until it obtained FDA approval to distribute the drug. DOJ alleged Forest Pharmaceuticals made a deliberate decision to continue distributing its unapproved Levothroid product in quantities far exceeding the amounts
permitted by the FDA’s distribution phase-down plan. The government further alleged the company submitted inaccurate information to the FDA as part of its New Drug Application (NDA) submission for Levothroid and that it obstructed an FDA regulatory inspection concerning the data submitted in the Levothroid NDA. The settlement also resolves civil False Claims Act (FCA) allegations related to Forest’s continued distribution of unapproved Levothroid and for failing to advise the Centers for Medicare and Medicaid Services that the drug no longer qualified for coverage by government healthcare programs, thereby causing false claims to be submitted to those programs, DOJ said. Other charges alleged Forest
promoted the drug Celexa—which was approved only for adult depression—for unapproved pediatric use. The government alleged, among other things, that Forest’s off-label promotion consisted of various sales techniques, including directing its sales representatives to promote pediatric use of Celexa in sales calls to physicians who treated children and adolescents, and hiring outside speakers to talk to pediatric specialists about the benefits of prescribing Celexa to children and teens. DOJ further alleged that Forest also marketed its drug Lexapro for pediatric uses, although it lacked FDA approval for such uses. According to DOJ, Forest used illegal kickbacks to induce physicians and others to prescribe Celexa and Lexapro. The settlement covers various lawsuits filed under the qui tam provisions of the FCA, DOJ noted. More than $88 million of the total settlement amount will be distributed to the federal government and more than $60 million will be distributed to and shared by the states. In addition, private whistleblowers will receive approximately $14 million from the federal share of the settlement
Agreement (CIA) with the Department of Health and Human Services Office of Inspector General. In a statement, Forest Laboratories, Inc. noted that “[n]either misdemeanor charge includes as an element false or deceptive conduct.” In addition, the company said it “expressly denies the allegations made in connection with the civil claims being settled.”
Covington, KY-based Omnicare, Inc. agreed to pay over $21 million to settle a whistleblower action alleging the long term care pharmacy defrauded the Medicaid programs of Massachusetts and Michigan by knowingly charging more for certain prescriptions than it charges private insurers. Michigan Attorney General Mike Cox announced September 21, 2010 that Omnicare, the owner of SpecializedPharmacy Services, will pay the state $11.6 million to resolve the fraud allegations under the Michigan False Claims Act. Omnicare also will pay Massachusetts $9.45 million for allegedly overcharging its Medicaid program, MassHealth, for prescription drugs, said Massachusetts Attorney General Martha Coakley. Vogel, Slade & Goldstein, the law firm that represented whistleblower Richard Krammerer, a former Omnicare financial analyst, said in a statement that Michigan and Massachusetts “are among a select group of states that expressly require drug providers like Omnicare to give the Medicaid program . . . their 'most favored customer price' for pharmaceuticals.” These states, the firm’s press release said, “go the extra step to protect taxpayer funds and require pharmacies to give Medicaid their best available price.” According to the complaint, filed in March 2007 in the U.S. District Court for the Northern District of Illinois, Omnicare charged Medicaid far higher prices than private insurers. The whistleblower will receive a share of the settlement in both states.
Novartis Pharmaceuticals Corporation agreed to pay $422.5 million to resolve criminal and civil liability arising from the illegal marketing of certain
pharmaceuticals, DOJ announced September 30, 2010. Under the settlement agreement, Novartis will plead guilty to a misdemeanor and pay a $185 million combined criminal fine and forfeiture related to the off-label promotion of its drug Trileptal, which was approved by the Food and Drug Administration (FDA) as an anti-epileptic drug for the treatment of partial seizures but not for any other use. In addition, Novartis will pay $237.5 million to resolve civil allegations under the False Claims Act that the company unlawfully marketed Trileptal and five other drugs, and thereby caused false claims to be submitted to government healthcare programs. The government alleged that Novartis illegally promoted Trileptal for a variety of uses, including psychiatric and pain uses, which were not medically accepted indications and therefore not covered by federal healthcare programs. The agreement also resolves allegations that the company paid kickbacks to healthcare professionals to induce them to prescribe Trileptal, Diovan, Zelnorm, Sandostatin, Exforge, and Tekturna, DOJ said. The federal share of the civil settlement is $149,241,306, and the state Medicaid share of the civil settlement is $88,258,694. In addition, because the civil settlement resolves four lawsuits filed under the qui tam provisions of the False Claims Act, the whistleblowers, all former Novartis employees, will receive payments totaling more than $25 million from the federal share of the civil recovery, DOJ said. Novartis also signed a Corporate Integrity Agreement (CIA) with the Department of Health and Human