Pharmaceutical Fraud
- As a result of a qui tam suit by a small home infusion company,
GlaxoSmithKline paid the United States $140 million to settle
allegations of fraudulent drug pricing and marketing that resulted
in the submission of inflated claims to Medicare, Medicaid, and
other federally funded heath care programs. The company allegedly
falsely inflated the prices of Zofran and Kytril, knowing that
those prices would be used by federal programs to set
reimbursement rates.
- AdvancePCS, a pharmacy benefit management company, paid the
United States $138.5 million to resolve allegations that it
exacted kickbacks, disguised as administrative fees, service
agreements and rebates, as well as cash payments, from drug
manufacturers for marketing their drugs to providers reimbursed by
federally insured health programs.
- Pursuant to a qui tam suit, Omnicare, Inc., the nation’s
largest provider of pharmacy services to skilled nursing
facilities and assisted living communities, agreed to pay $49.5
million to the United States and 43 states to resolve allegations
that it had substituted different versions of prescribed drugs
solely to increase profits and not for any legitimate medical
reason.
Pharmaceutical Distribution Fraud
- A pharmacist and principal owner of King Drugs, Inc. pleaded
guilty to illegally selling prescription drug samples to the
public after repackaging the samples. The defendant paid $10.5
million to the United States, relinquished his pharmacy license,
agreed to a permanent exclusion from all federal health benefit
programs, and was sentenced to home confinement and probation.
- A Las Vegas, Nevada individual was convicted of 17 felony
counts related to the distribution of Rohypnol, otherwise known as
the “date rape drug.” The defendant, who used forged and
fraudulent documents to deceive U.S. Customs Service and Federal
Drug Administration employees related to the importation of the
drug from Germany, was sentenced to 10 years imprisonment and
forfeited his home valued at $285,000.
- A California man was sentenced to 51 months imprisonment for
fraudulently operating an internet pharmacy. Customers paid a fee
for a physician’s consultation, but there were no physicians
associated with the pharmacy and the dispensed drugs were all
counterfeit.
Hospital Fraud
- Pursuant to a qui tam claim, HealthSouth Corporation paid the
United States $327 million to settle allegations of three separate
schemes to defraud federal health programs. The first scheme
involved false claims for outpatient physical therapy services
that were not supported by certified plans or administered by
licensed physical therapists, and did not involve one-on-one
therapy, as represented to the government. The second scheme
involved overbilling Medicare on hospital cost reports and home
office cost statements. The third scheme involved billing for
unallowable costs, such as lavish entertainment and leisure travel
expenses. HealthSouth also entered into a Corporate Integrity
Agreement (“CIA”) with HHS/OIG to prevent future misconduct.
- Pursuant to a qui tam suit, the Eisenhower Medical Center paid
the United States $8 million to settle allegations that it
fraudulently overbilled federal health insurance programs. The
relator alleged that Healthcare Financial Advisors was asked to
help prepare two cost reports – an inflated one for Medicare – and
a second one designed for internal use which accurately reflected
the amount of reimbursements the hospital should have received.
Dialysis Fraud
- Gambro Healthcare paid $310 million to the United States to
resolve allegations concerning the submission of false claims to
Medicare and Medicaid in connection with dialysis services. The
scheme involved a sham durable medical equipment company, phantom
billing, billing for services that were not medically necessary,
and paying kickbacks to physicians for referrals. The sham
equipment subsidiary paid a $25 million criminal fine and agreed
to a permanent exclusion from the Medicare program.
Fraud on Community Health Centers
- Five individuals and a company, Duncan Drugs, were convicted
of health care fraud for defrauding the Community Mental Health
Center of East Central Georgia. The defendants fraudulently
diverted $2 million of the Center’s funds, and paid almost $1
million in kickbacks to a Georgia representative which was used,
in part, to fund his election campaigns. Sentences ranged from 33
months to 120 months in prison, and forfeitures and restitution
equaled almost $3.5 million.
- The former director of the Kickapoo Community Health Services
Center was convicted of three felony counts related to the theft
of the Center’s funds. He was sentenced to 15 years in prison and
ordered to pay $100,000 in restitution.
Medicaid Fraud
- An Indiana dentist was sentenced to 57 months in prison for a
Medicaid fraud scheme for billing for services which were not
provided or were not medically necessary. The defendant and his
two corporations were ordered to pay $2.4 million in restitution
and $70,000 to the Indiana Attorney General’s Office for the costs
of the investigation by the state’s Medicaid Fraud Control Unit.
- Pursuant to a qui tam suit, the University of Miami paid the
United States almost $4 million to settle allegations that it
fraudulently doublebilled and overcharged Medicaid in connection
with several of its outpatient clinics. The relator alleged that
the University billed Medicaid for outpatient services and that
its outpatient clinics were also billing Medicaid for the same
services.
- A pharmacist and owner of Pierce Pharmaceuticals, Inc. was
sentenced to 33 months in prison and ordered to pay $2 million in
restitution to the North Carolina Medicaid program in connection
with prescription drug fraud regarding long term care facilities.
The defendant submitted claims for payment to the Medicaid program
for refilling prescriptions that were never filled, delivered, or
even requested by patients.
Chiropractic Fraud
- The owners and operators of twelve chiropractic/medical
clinics in Ohio pleaded guilty to conspiring to commit health care
fraud by billing Medicare and private health care benefit programs
$4.8 million for non-covered chiropractic services for which they
were ultimately paid $1.7 million. The defendants owned a chain of
chiropractic clinics and converted them to joint chiropractic and
medical clinics so they could use medical doctor billing numbers
to avoid limitations on chiropractic care and bill for non-covered
services. The company, MedBack, fraudulently billed for all
chiropractic services using Current Procedural Terminology (“CPT”)
codes for physical therapy or for office visits to the medical
doctor. The insurance plans denied payment for non-covered
chiropractic services, and the owners sent appeal letters falsely
stating that a medical doctor had performed all services and that
the MedBank clinics did not provide chiropractic services. The
defendants agreed to pay $1.7 million in restitution and be
excluded from federal health care benefit programs for fifteen
years.
Podiatry Fraud
- A podiatrist in Ohio was sentenced to 135 months in prison and
ordered to pay restitution of $1.7 million, as well as forfeit
three Ohio properties following his second conviction on health
care fraud charges. The defendant had previously pleaded guilty to
upcoding claims submitted to Medicare for nursing home podiatry
services, and had been ordered not to bill Medicare for eight
years. At the time he was pleading guilty in 1998, however, the
defendant was already scheming to keep control of his practice and
its Medicare revenues. The defendant pretended to sell his
practice and transfer financial control of the practice to another
individual, all while continuing to control and expand the
practice, and using its Medicare revenues to pay his own expenses.
Ambulance Services Fraud
- Adventist Health System, Sunbelt Healthcare Corporation, and a
management company that administered ambulance operations at three
hospitals affiliated with the company, paid the government $20.3
million to settle allegations that they billed Medicare for
ambulance transports that were not medically necessary. The
management company and the hospitals allegedly created false
physician certifications regarding the medical necessity of
ambulance trips.
Kickbacks
- PharMerica, Inc. and PharMerica Drug Systems, Inc. entered a
settlement agreement with the HHS/OIG to resolve allegations that
the companies paid unlawful kickbacks in connection with a
purchase of a small Virginia pharmacy. In one of the largest
settlements of a civil monetary penalty (“CMP”) kickback case to
date, PharMerica agreed to pay more than $5.9 million to the
government. A leading supplier of pharmacy services to long term
care institutions, PharMerica overpaid for the purchase of the
pharmacy in return for a commitment from the seller—who also owned
17 nursing homes—to refer its Medicare and Medicaid pharmacy
business to PharMerica. The acquisition amounted to the unlawful
purchase of referrals of federal health care program business from
the nursing facility chain. PharMerica also entered into a
five-year CIA with the HHS/OIG.
- Peter Rogan, the former CEO of Edgewater Medical Center, was
ordered to pay almost $65 million to the US government for various
schemes to defraud federal health care programs primarily through
unlawful referrals and kickbacks in violation of the Antikickback
and Stark statutes.
False Claims by a Research University
- The University of Alabama at Birmingham and two related
entities agreed to pay the United States $3.39 million to settle
allegations that they violated the False Claims Act (FCA) with
respect to claims submitted in connection with the school’s health
science research activities. The settlement resolved allegations
that, in completing applications for federal health science
research grants, the school overstated the percentage of work
effort that the researchers were able to devote to the grant. It
was also alleged that the university, and the entity through which
its medical school faculty provide clinical services, unlawfully
billed Medicare for clinical research trials that were also billed
to the sponsor of research grants.
Fraudulent Heath Insurance Provider
- A San Francisco executive was sentenced to 41 months in prison
and ordered to pay $1.3 million in restitution for the operation
of a fraudulent health insurance scheme that defrauded thousands
of people across the United States. The victims purchased health
insurance plans from the company, only to discover after illnesses
or accidents that their health insurance was essentially
worthless. The phony health insurance company collected over $2.8
million in premiums but deposited only a small fraction of those
funds into trust accounts. Instead, the defendant executive spent
much of the money on his personal expenses, paying salaries to
members of his family, leasing expensive cars, buying football
tickets, and paying commissions to so-called promoters who helped
market the fraudulent plan.
Durable Medical Equipment Fraud
- The owner of a California medical supply company pleaded
guilty to health care fraud for $2.4 million in false bills to
Medicare for power wheelchairs, hospital beds and other
equipment that was never prescribed by a physician, and never received by
the beneficiaries. The defendant agreed to forfeit his home,
vehicles and bank accounts to pay restitution to the government.
- A medical equipment company owner in Oklahoma was sentenced to
serve 5 months in prison and to pay more than $340,000 in
restitution after pleading guilty to health care fraud. She
admitted to forging doctors’ names on phony certificates of
medical necessity, furnished patients with scooters valued at
$1,500, but billed the Medicaid program for electronic wheelchairs
at $5,000.
Obstruction of a Federal Audit
- OPI Properties, Inc., a subsidiary of the Swiss Novartis
Corporation, pleaded guilty to nine felony counts of attempting to
obstruct a federal audit. OPI was ordered to pay $4.5 million to
the government and was permanently excluded from Medicare and
Medicaid. Under a separate civil agreement, Novartis Nutrition
Company, also a subsidiary of the Swiss company, agreed to pay
over $44 million to the United States. OPI offered kickbacks to
federal agents, operating as a storefront distributor of medical
supplies, in exchange for a long-term contract involving services
to Medicare patients, then created false invoices for the free
items, instructing the undercover agents to produce the dummied
invoices in the event of a Medicare audit.
Physician Fraud
- A Virginia physician specializing in pain management was
sentenced to 25 years imprisonment and ordered to pay a $1 million
fine for his conviction on drug distribution charges and drug
trafficking that resulted in one death and serious injuries to
others. The Government proved that the defendant performed
perfunctory exams on patients and then facilitated the patients’
demand for excessive amounts of controlled substances, including
OxyContin, and that the physician knew that patients were abusing
the controlled substances, or selling them to others.
Medicare Contractor Fraud
- United Healthcare Insurance Company paid the United States
$3.5 million to settle allegations that the company defrauded the
Medicare program. As a former Durable Medical Equipment ("DME") Regional Carrier, United
Healthcare contracted with CMS to process Medicare claims for DME
submitted by providers, suppliers and Medicare beneficiaries in
the Northeastern United States. The company allegedly knowingly
mishandled phone inquiries received from Medicare beneficiaries
and providers and then falsely reported its performance
information to Centers for Medicare and Medicaid Services ("CMS") concerning the company’s handling of those
calls.
Teaching Hospital Physicians’ Fraud
- The University of Medicine and Dentistry of New Jersey agreed
to pay the federal government $1.4 million to resolve allegations
that the medical schools falsely represented that services billed
to Medicare were personally provided by teaching faculty, when
there was insufficient documentation that those physicians were
“personally and identifiably involved” in the care.
Quality of Care Issues
- A nursing home owned by Hillcrest Healthcare, Inc. disclosed
egregious quality of care problems at its Connecticut facility.
One resident had died of septic infection allegedly caused by
improperly treated bedsores; others suffered from severe pressure
sores, dehydration, and weight loss. The
government also alleged that the home failed to employ adequate
staffing and failed to follow plans of care. By consent order,
the home surrendered its license and paid the state $200,000. The
company pled nolo contendere in state court to charges of
Manslaughter in the Second Degree arising out of death of the
resident. The company agreed to pay the federal government
$750,000 to resolve allegations of submitting false claims to
Medicare and Medicaid, and agreed to be permanently excluded from
the Medicare and Medicaid programs.
- A suburban Pittsburgh nursing home and its former administrator
were convicted of health care fraud and numerous false statements
relating to health care matters. The government proved that the
nursing home administrator and Atrium I Nursing and Rehabilitation
Center engaged in a scheme to defraud Medicare and Medicaid out of
more than $7 million from 1999 through August 2003. The scheme
involved a failure to provide required care for Atrium residents,
most of whom were diagnosed with Alzheimer’s disease. The
defendants falsely represented they were providing appropriate
care, and concealed deficiencies from regulatory agencies by the
extensive falsification of records.
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