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Columbia University Settles FCA Allegations

According to an article on Reuters, Columbia University has agreed to pay $9 million to settle a lawsuit brought pursuant to the qui tam provisions of the False Claims Act.  Craig Love, former director of finance for Columbia’s International Center for AIDS Care and Treatment Programs (ICAP), brought the lawsuit in 2011 alleging that Columbia submitted false claims in connection with grants it obtained to fund AIDS and HIV related research.  Specifically, he alleged that Columbia used grant money for work that was not dedicated to the funded projects.

“Grantees are required to use federal money for the purpose for which the grant was given and nothing else,” said U.S. Attorney Preet Bharara. “The applicable rules are clear, and they are at the core of ensuring that tax dollars are appropriately spent. Educational institutions, like everyone else, should be held accountable when they fail to follow those rules.”

To report fraud, please contact Frohsin & Barger.

Jury Finds Trinity Industries Defrauded U.S. of Millions

On Monday, a Texas jury found that Trinity Industries Inc. (Trinity) defrauded the United States government of $175 million by hiding changes to its guardrail systems.  According to an article in the New York Times, Joshua Harman, a competitor, filed a False Claims Act lawsuit, under the qui tam provisions of the act, in 2012 alleging that Trinity changed the design of its ET-Plus rail head without disclosing the changes to the Federal Highway Administration.  As a result of the change, the guardrail can seize up and impale vehicles that hit the end of the guardrail claims an article on Bloomberg.

The company could face liability close to $1 billion after the damages are tripled as required by the False Claims Act.  In addition, the Act imposes penalties for each false claim submitted.  Trinity has indicated that it will appeal the verdict.

To report fraud, please contact Frohsin & Barger.

Extendicare Settles Allegations of Substandard Care and Unnecessary Therapy

Thanks to two False Claims Act lawsuits, brought pursuant to the qui tam provisions of the act, Extendicare Health Services, Inc. (Extendicare) and its subsidiary Progressive Step Corp. (ProStep) have agreed to pay $38 million to resolve allegations that it billed Medicare and Medicaid for materially substandard nursing services and for medically unnecessary rehabilitation therapy services according to a DoJ press release.  The settlement resolves allegations that Extendicare billed the federal government for materially substandard nursing services provided in 33 facilities across 8 states.  For example, it failed to follow appropriate protocols to prevent pressure ulcers or falls.  The settlement also resolves allegations that Extendicare provided medically unreasonable and unnecessary rehabilitation therapy services to its Medicare beneficiaries in order to receive the highest per diem rate possible.

“Nursing home residents should not be subject to unreasonable or unnecessary rehabilitation therapy that is dictated by a company’s profits rather than patient needs,” said U.S. Attorney Zane David Memeger for the Eastern District of Pennsylvania.

Relator Tracy Lovvron will receive approximately $1.8 million as her share of the recovery in the RUGS upcoding case and Relator Donald Gallick will receive more than $250,000 as his share in worthless services case.

To report Medicare fraud, please contact Frohsin & Barger.

Medicare Fraud Arrests in South Florida

According to an article in the Miami Herald, federal authorities have now arrested and charged more than 30 suspects in relation to a Medicare fraud scheme in South Florida. The Department of Justice alleges that the suspects have submitted approximately $205 million in fraudulent claims to Medicare. Nearly 58 other suspects nationwide were also charged with Medicare related fraud as a part of this widespread takedown by the Justice Department.

The Miami-area is generally regarded as “the nation’s epicenter of Medicare corruption.” This reputation has been reinforced with the recent arrests, accounting for one-third of the total. On Thursday October 2nd, Karen Kallen-Zury, chief executive officer of Hollywood Pavilion Psychiatric Hospital, and two other executives, Daisy Miller and Michele Petrie, were arrested on charges of paying thousands of dollars in kickbacks to recruiters and patients. Many of the patients did not require mental health services. However, Kallen-Zury falsified documents to make it appear that the services were legitimate.

To report Medicare fraud, please contact Frohsin & Barger.

Shire Pharmaceuticals Resolves False Claims Act Allegations

As the result of the filing of two False Claims Act lawsuits, Pennsylvania-based Shire Pharmaceuticals LLC (“Shire”) has agreed to pay $56.5 million to resolve allegations regarding its marketing and promotion of Adderall XR, Vyvanse, Daytrana, Pentasa and Lialda, according to a DoJ press release.  A former Shire executive, Dr. Gerardo Torres, and three former Shire sales representatives, Anita Hsieh, Kara Harris and Ian Clark, filed the lawsuits under the qui tam provisions of the False Claims Act.  The settlement resolves allegations that between January 2004 and September 2010, Shire and its employees or representatives misrepresented and promoted various drugs including Adderrall XR, Vyvanse, Daytrana, Pentasa and Lialda despite lacking the clinical data to support its claims.

“Marketing efforts that influence a doctor’s independent judgment can undermine the doctor-patient relationship and short-change the patient.” said U.S. Attorney Zane David Memeger for the Eastern District of Pennsylvania.  “Where children’s medication is concerned, it can interfere with a parent’s right to clear information regarding the risks to the safety and health of their child.  Shire cooperated throughout this investigation and, in advance of this settlement, began to correct its marketing activities.”

To report False Claims Act violations, please contact Frohsin & Barger.

Skilled Nursing Facilities Settle FCA Allegations

According to a DoJ press release, Life Care Services, LLC (LCS) and CoreCare V LLP (doing business as ParkVista) have agreed to pay $3.75 million to settle allegations that they submitted false claims to Medicare for unreasonable or unnecessary rehabilitation therapy to patients in their skilled nursing facilities. LCS manages skilled nursing facilities throughout the country including ParkVista, a skilled nursing facility in Fullerton, California. LCS convinced ParkVista and other facilities to hire RehabCare Group East, Inc. (RehabCare) to provide rehabilitation therapy services.

The government alleges that LCS and ParkVista submitted, or caused to be submitted, false claims for rehabilitation therapy by failing to prevent RehabCare from providing unreasonable or unnecessary therapy to patients in order to increase Medicare reimbursement. The government further alleges that LCS and ParkVista failed to prevent RehabCare from utilizing other practices that inflated Medicare reimbursement for therapy services.

“Patients in skilled nursing facilities and the patients’ families should be able to have confidence that the facilities are not allowing therapy companies to manipulate the amount of therapy being provided based on financial motives,” said U.S. Attorney Carmen M. Ortiz for the District of Massachusetts.  “Settlements like this one show that, when a facility contracts with an outside rehabilitation therapy provider, the facility has a continuing responsibility to ensure that the provider is not engaged in conduct that causes the submission of false claims to Medicare.”

To report Medicare fraud, please contact Frohsin & Barger, LLC.

United States Pursues FCA Allegations Against Doctors for Spinal Implant Bribes

According to a DoJ press release, the United States has filed complaints against Dr. Aria Sabit, Reliance Medical Systems, Apex Medical Technologies, Kronos Spinal Technologies, and the company owners Brett Berry, John Hoffman, and Adam Pike under the False Claims Act alleging that Apex and Kronos paid physicians in order to get them to use Reliance spinal implants.  Specifically, the United States alleges that Reliance funneled improper payments to Dr. Sabit through Apex in exchange for using Reliance spinal implants in his surgeries.  Between May 2010 and July 2012, Dr. Sabit used Reliance implants in 90 percent of his patients in exchange for $438,570.  It is alleged that the payments induced Dr. Sabit to perform medically unnecessary surgeries on patients who did not need spinal implants.

“Improper payments to physicians can alter a physician’s judgment about patients’ true health care needs and drive up health care costs for everyone,” said Assistant Attorney General Stuart F. Delery for the Justice Department’s Civil Division.  “The Justice Department is committed to enforcing the laws that prohibit such payments.”

The lawsuit was initially brought by Dr. Cary Savitch and Dr. Gary Proffett under the qui tam or whistleblower provisions of the False Claims Act.

To report fraud, please contact Frohsin & Barger.

California Nursing Homes Face FCA Allegations

Watsonville Nursing Center, formerly Country Villa Watsonville East Nursing Center, and Watsonville Post-Acute Care Center, formerly Country Villa Watsonville West Nursing and Rehabilitation Center, in California are facing allegations that they overmedicated patients with antipsychotics and other medication for the benefit and convenience of staff according to a article in McKnights.  The medications were not medically necessary for the patients; however, they billed Medicare for the medication, in violation of the False Claims Act.

The complaint also names The Arba Group, a management group, and other owners as defendants.  While, the defense denies liability, the United States is pursuing the action to recover civil penalties.

To report Medicare fraud, please contact Frohsin & Barger.

SEC Announces Whistleblower Award

The Securities and Exchange Commission (SEC) announced a $300,000 whistleblower award to an employee in a company’s audit and compliance division according to a recent SEC press release.  The employee reported internally, but went to the SEC after the company refused to take action.  The information from the whistleblower led directly to a SEC enforcement action.

“Individuals who perform internal audit, compliance, and legal functions for companies are on the front lines in the battle against fraud and corruption.  They often are privy to the very kinds of specific, timely, and credible information that can prevent an imminent fraud or stop an ongoing one,” said Sean McKessy, Chief of the SEC’s Office of the Whistleblower.  “These individuals may be eligible for an SEC whistleblower award if their companies fail to take appropriate, timely action on information they first reported internally.”

SEC whistleblowers may be eligible for 10 to 30 percent of the amount collected.  By law, the SEC must protect whistleblower identities.

To report fraud, please contact Frohsin & Barger.

Frohsin & Barger Announces DoJ Intervention in Qui Tam Action Against Evercare Hospice (now Optum Palliative & Hospice Care)

Today,  the United States Department of Justice issued a press release stating that it has partially intervened in a qui tam suit filed by Frohsin & Barger against Evercare Hospice and Palliative Care (Evercare) for alleged false claims under the Medicare hospice benefit (United States ex rel. Rice v. Evercare Hospice, Inc., No. 14-cv-01647 (D. Colo.)). Renamed, Optum Palliative and Hospice Care, Evercare is a nationwide  for-profit provider of hospice services with ties to UnitedHealth Group Inc.

Frohsin & Barger filed the suit on behalf of a former employee of Evercare who was sadden by what she perceived to be an abuse of the hospice benefit and a deciet against patients who were unwittingly  convinced to forego all curative treatment and elect end-of-life care when they were not actually dying.  In announcing its intervention into the case, DoJ highlighted that the lawsuit makes “allegations that management pressured employees and physicians to admit and retain patients who were not terminally ill and challenged or disregarded physicians’ decisions that patients should be discharged.”

“Fewer than 25% of all False Claims Act qui tam cases result in intervention,” said Jim Barger, attorney for relator Sharelene Rice.  Barger is a scholar on the federal and state False Claims Act and whistleblower litigation who teaches upper level courses on the subject at the University of Alabama School of Law.  “So, we view government intervention as strong vindication that the United States agrees with our client and is willing to vigorously pursue her allegations.”

In recent years, for-profit corporations have made a huge push into the hospice market, which is overwhelmingly funded by taxpayer dollars, primarily through Medicare but also through Medicaid and Tricare.  Investigative reporters have also begun to question whether the staggering profits in hospice are legitimate, including recent reports by the Washington Post and by the Huffington Post.  Several major national hospice chains are currently under scrutiny and subject to lawsuits by the Department of Justice and former employee whistleblowers, many of whom are represented by Frohsin & Barger.  Under the False Claims Act, qualifying whistleblowers are entitled to receive 15-25% of any recovery made by the government in an intervened case.

To report hospice fraud or other Medicare fraud, contact Frohsin & Barger.


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