Patient Receives $2.25 Million Whistleblower Award For Exposing Medicare Fraud

A patient who received a defective implantable defibrillator will receive a $2.25 million award for filing a whistleblower lawsuit that exposed improper marketing practices concerning these medical devices.

The whistleblower filed this False Claims Act lawsuit against Boston Scientific Corp. and its subsidiaries, Guidant LLC, Guidant Sales LLC and Cardiac Pacemakers Inc., alleging that the defendants knowingly sold defective heart devices that were implanted into Medicare patients.

According to the whistleblower’s allegations, the devices contained a defect that resulted in “arcing,” which caused the devices to short circuit and quit working.  Although the defendants were aware of the problem, they continued to sell their remaining stock of defective devices.  Additionally, the defendants took steps to conceal the problem from patients, doctors, and government officials.

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Former Lab Employees Share $3,755,500 Whistleblower Reward

Two former lab employees will share $3,755,500 as their reward for filing a whistleblower lawsuit exposing fraudulent Medicare billing practices at Diagnostic Laboratories and Radiology (Diagnostic Labs), a facility operated by Kan-Di-Ki LLC, formerly known as Kan-Di-Ki Inc.

Diagnostic Labs will pay $17.5 million to settle the whistleblowers’ allegations that the California-based company violated the federal and California False Claims Acts by paying kickbacks for referrals of mobile lab and radiology services subsequently billed to Medicare and Medi-Cal (the state of California’s Medicaid program).

Diagnostic Labs allegedly manipulated Medicare’s reimbursement system for inpatient and outpatient services by charging Skilled Nursing Facilities (SNFs) in California discounted rates for inpatient services paid by Medicare in exchange for the facilities’ referral of outpatient business to Diagnostic Labs.  For inpatient services, Medicare pays a fixed rate based on the patient’s diagnosis, regardless of specific services provided.  For outpatients, Medicare pays for each service separately.  Diagnostic Labs’ scheme enabled the SNFs to maximize profit earned for providing inpatient services by decreasing SNFs’ costs of providing these services.  It also allegedly allowed Diagnostic Labs to obtain a steady stream of lucrative outpatient referrals that it could directly bill to Medicare and Medi-Cal.  The provision of inducements, including discounted rates, to generate referrals is prohibited by federal and state law.

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Receptionist Files Whistleblower Lawsuit That Leads To $14,902,832 Judgment

A federal judge has ordered the owner of a home health agency that operated in the Westlake District of Los Angeles to pay nearly $15 million – or approximately three times the losses suffered by Medicare as a result of the company’s illegal practices.

United States District Judge Stephen V. Wilson previously issued a $14,902,832 default judgment against Hee Jung Mun, the former owner and operator of GreatCare Home Health Agency, who was commonly known as Angela Mun.

The Medicare fraud scheme came to light in March 2010 when GreatCare’s then-receptionist filed the whistleblower lawsuit under the federal False Claims Act.

According to the allegations raised by the whistleblower, GreatCare paid kickbacks to physicians and others to induce them to refer patients to GreatCare in a $5 million Medicare fraud scheme.  As part of the scheme, Medicare beneficiaries were also paid to sign up for GreatCare’s service, even though many of them were not eligible for home health services. GreatCare billed Medicare for services that were not rendered, were unnecessary, and/or were performed by unlicensed personnel.

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The Gallup Organization Agrees To Pay $10.5 Million To Settle Whistleblower Allegations

The Gallup Organization has agreed to pay $10.5 million to settle allegations that it violated the False Claims Act and the Procurement Integrity Act for conduct involving several of its federal government contracts and subcontracts.  Gallup is a polling and market research firm headquartered in Washington, D.C.

The settlement resolves allegations that Gallup knowingly overstated its true estimated labor hours in proposals to the U.S. Mint and State Department for contracts and task orders that were to be awarded without competition.  Because of Gallup’s conduct, the complaint alleged, the two federal agencies awarded Gallup contracts and task orders at falsely inflated prices.  The settlement also resolves allegations that Gallup engaged in improper employment negotiations with a then Federal Emergency Management Agency (FEMA) official, Timothy Cannon, in order to obtain a FEMA subcontract at an inflated price and additional FEMA funding after the subcontract had been awarded.

The False Claims Act allegations against Gallup were originally brought in a whistleblower lawsuit filed by Gallup’s former Director of Client Services.  The False Claims Act prohibits the submission of false claims for government money or property and allows the United States to recover treble damages and penalties for a violation.  Under the Act’s whistleblower provisions, a private party may file suit on behalf of the United States and share in any recovery.  The United States may elect to intervene and take over the case, as it did here.  As a result of the settlement with Gallup, the whistleblower will receive $1,929,363 as his share of the government’s recovery.

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Amgen Inc. Pays Over $15 Million To Resolve Whistleblower Lawsuit

Biopharmaceutical company Amgen Inc. agreed to pay the United States more than $15 million to resolve allegations that the Ventura County company provided illegal financial incentives to physicians and physician groups to induce them to prescribe the cancer drug Xgeva.

The settlement agreement resolves resolve allegations that Amgen violated the Medicare Anti-Kickback Statute and the federal False Claims Act. The Medicare Anti-Kickback Statute prohibits anyone from offering, paying, soliciting or receiving anything of value to generate referrals for items or services payable by any federal health care program.

Xgeva, which is the brand name of the drug denosumab, was approved by the Food and Drug Administration in late 2010 for use with certain cancer patients undergoing chemotherapy. It is most commonly prescribed for patients with metastatic bone disease in order to prevent skeletal-related adverse events.

In order to increase sales of Xgeva, Amgen used data purchase agreements – which the company called the “Deep Dive” contracts – to provide financial incentives to oncologists and urologists to prescribe Xgeva. The original plan for the Deep Dive contracts called for Amgen to pay doctors to fill out a short survey on the Internet on how they were treating patients with bone cancer, including which drugs were used – whether or not Xgeva was prescribed. However, Amgen altered the original Deep Dive program design by increasing the amount of money it would pay doctors, and by offering such payments only to doctors who prescribed Xgeva for their patients. Amgen’s Xgeva marketing team also was not supposed to know the identities of the doctors who received Deep Dive contracts, but team members had access to that information. Additionally, in a further effort to influence doctors to prescribe Xgeva, Amgen provided cash payments characterized as honoraria to oncologists and urologists for participating in audience response sessions, data market research surveys, and “treatment trends” advisory board programs which touted the benefits of Xgeva.

This settlement resolves a whistleblower lawsuit filed by two Amgen employees, who will collectively receive $2.75 million as their share of the settlement proceeds.

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Former Hospital Administrator Receives $2,160,000 For Exposing Medicare Fraud

Dubuis Health System and Southern Crescent Hospital for Specialty Care, Inc. (Southern Crescent) have agreed to pay the United States $8,000,000 to settle allegations that they submitted false claims to Medicare.  Dubuis Health System manages long-term acute care hospitals in multiple states, including Southern Crescent.  Southern Crescent is a long-term acute care hospital located in Riverdale, Georgia.

Long term acute care hospitals are similar to typical acute care hospitals except that they are certified to focus on patients with more complex medical needs who, on average, remain in the hospital more than 25 days.  Long term acute care hospitals receive a higher rate of Medicare reimbursement than do typical acute care hospitals.

This settlement resolves allegations that between 2003 and 2009, Dubuis Health System and Southern Crescent knowingly kept patients hospitalized beyond the time considered to be medically necessary, to increase their Medicare reimbursement and to maintain Southern Crescent’s classification as a long-term acute care facility.

This matter was initiated by a former administrator at Southern Crescent, who filed a whistleblower complaint under the False Claims Act.  As a result of this settlement, the whistleblower will receive $2,160,000 of the United States’ recovery

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Wyeth Pharmaceuticals Inc. Agrees To Pay $490.9 Million To Resolve False Claims Act Lawsuits

Wyeth Pharmaceuticals Inc., a pharmaceutical company acquired by Pfizer, Inc. in 2009, has agreed to pay $490.9 million to resolve its criminal and civil liability arising from the unlawful marketing of the prescription drug Rapamune for uses not approved as safe and effective by the U.S. Food and Drug Administration (FDA).  Rapamune is an “immunosuppressive” drug that prevents the body’s immune system from rejecting a transplanted organ.

The Federal Food, Drug and Cosmetic Act (FDCA) requires a company such as Wyeth to specify the intended uses of a product in its new drug application to the FDA.  Once approved, a drug may not be introduced into interstate commerce for unapproved or “off-label” uses until the company receives FDA approval for the new intended uses.  In 1999, Wyeth received approval from the FDA for Rapamune use in renal (kidney) transplant patients.  However, the information alleges, Wyeth trained its national Rapamune sales force to promote the use of the drug in non-renal transplant patients.  Wyeth provided the sales force with training materials regarding non-renal transplant use and trained them on how to use these materials in presentations to transplant physicians.  Then, Wyeth encouraged sales force members, through financial incentives, to target all transplant patient populations to increase Rapamune sales.

Wyeth has pleaded guilty to a criminal information charging it with a misbranding violation under the FDCA.  The resolution includes a criminal fine and forfeiture totaling $233.5 million.  Under a plea agreement, which has been accepted by the U.S. District Court in Oklahoma City, Wyeth has agreed to pay a criminal fine of $157.58 million and forfeit assets of $76 million.

The resolution also includes civil settlements with the federal government and the states totaling $257.4 million.  Wyeth has agreed to settle its potential civil liability in connection with its off-label marketing of Rapamune.  The government alleged that Wyeth violated the False Claims Act, from 1998 through 2009, by promoting Rapamune for unapproved uses, some of which were not medically accepted indications and, therefore, were not covered by Medicare, Medicaid and other federal health care programs.  These unapproved uses included non-renal transplants, conversion use (switching a patient from another immunosuppressant to Rapamune) and using Rapamune in combination with other immunosuppressive agents not listed on the label.  The government alleged that this conduct resulted in the submission of false claims to government health care programs.  Of the amounts to resolve the civil claims, Wyeth will pay $230,112,596 to the federal government and $27,287,404 to the states.

The civil settlement resolves two whistleblower lawsuits, one filed filed by a former Rapamune sales representative and a pharmacist, and the other filed by a former Rapamune sales representative.

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Whistleblower Lawsuit Leads To $26 Million Recovery Of Government Funds

Shands Teaching Hospital & Clinics Inc., Shands Jacksonville Medical Center Inc. and Shands Jacksonville Healthcare Inc. (collectively, Shands Healthcare), which operates a network of health care providers in Florida, will pay the government and the state of Florida a total of $26 million to settle allegations that six of its health care facilities submitted false claims to Medicare, Medicaid and other federal health care programs for inpatient procedures that should have been billed as outpatient services.

Allegedly, from 2003 through 2008, the six hospitals knowingly submitted inpatient claims to Medicare, Medicaid and TRICARE for certain services and procedures that Shands Healthcare knew were correctly billable only as outpatient services or procedures.

The six Florida hospitals were named as defendants in a whistleblower lawsuit filed by the president of a healthcare consulting firm.

Of the $26 million settlement, $25,170,400 will go to Medicare and other federal health care payors, and the state of Florida will receive $829,600.

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Whistleblower Receives Over $10.9 Million For Exposing Fraudulent Practices By Government Suppliers

Ohio-based RPM International Inc. and its subsidiary, Tremco Inc., have paid $60.9 million to resolve allegations that Tremco filed false claims in connection with two multiple award schedule (MAS) contracts with the General Services Administration (GSA) for roofing supplies and services.

Tremco failed to provide the government with price discounts provided to non-federal government customers. Tremco also allegedly marketed expensive materials to government purchasers without disclosing the availability of the same materials at lower cost that were manufactured and sold by the company.  Tremco is a manufacturer of construction products and services and is a subsidiary of the RPM Building Solutions Group.

Allegedly, from January 2002 to March 2011, Tremco knowingly violated its contractual obligations to provide GSA with current, accurate and complete information about its commercial sales practices, to report changes in discounts to comparable commercial customers and to pass those discounts on to government customers.  As a result, the government allegedly paid more than it should have for Tremco’s services and products.   In addition, Tremco allegedly improperly marketed generic products as a superior line of the same product and used a defective adhesive formula in its roofing systems.

The GSA MAS program provides government purchasers with a streamlined process for procurement of commonly used commercial goods and services.  To be awarded a MAS contract, and thereby gain access to the broad government marketplace and ease of administration that comes from selling to hundreds of government purchasers under one contract, contractors must agree to disclose commercial pricing policies and practices.

The settlement resolves a whistleblower lawsuit filed on behalf of the government by a former Tremco vice president, who will receive more than $10.9 million as his share of the recovery in the case.

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Whistleblower Lawsuits Lead To $3.7 Million Recovery For Federal Student Aid Programs

ATI Enterprises Inc. will pay the government $3.7 million to resolve False Claims Act allegations that it falsely certified compliance with federal student aid programs’ eligibility requirements and submitted claims for ineligible students.

Allegedly, ATI Enterprises knowingly misrepresented to the Texas Workforce Commission and to the Accrediting Commission of Career Schools and Colleges its job placement statistics to maintain its state licensure and accreditation.   To participate in federal student aid programs, as authorized by Title IV of the Higher Education Act of 1965, as amended (Title IV), schools must enter into a contract with the Secretary of Education called a Program Participation Agreement, in which they agree to a number of terms.   For example, if an institution advertises its job placement rates as a means of attracting students to enroll, it must make available to prospective students its most recent and accurate employment statistics to substantiate the truthfulness of its advertisements.   The government alleged that, by misrepresenting its job placement statistics, ATI Enterprises fraudulently maintained its eligibility for federal financial aid under Title IV.

The government further alleged that ATI employees engaged in fraudulent practices to induce students to enroll and maintain their enrollment in the schools.   This falsely increased the schools’ enrollment numbers, and consequently, the amount of federal dollars they received at the expense of taxpayers and students, who incurred long-term debt.

The settlement resolves allegations made by two whistleblowers in separate False Claims Act complaints.

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