Articles Posted in Healthcare Fraud

andres-de-armas-103880-copy-300x200The Department of Justice (DOJ) for the Eastern District of California announced on July 7 that Wal-Mart Stores, Inc. (Walmart) paid $1.65 million to resolve accusations related to unlawful medical claims. This is an important suit as it demonstrates that the federal and state governments will go after large retailers for false claims. Pursuing whistleblower suits and securing government funds that were unlawfully obtained remains a top property for the DOJ.

Walmart’s False Claims

Through a qui tam suit brought by a former Walmart pharmacist in the Sacramento area, the California government learned that Walmart was allegedly submitting false claims to the state’s Medi-Cal program in order to increase reimbursements. Supposedly, Walmart would knowingly submit claims that were not supported by a proper and relevant diagnosis or documentation. More specifically, Walmart would submit reimbursement claims for Code 1 drugs that were not based on proper and pre-approved diagnoses. Medi-Cal only reimburses for Code 1 drugs if they were prescribed for approved diagnoses. If a Walmart pharmacy wanted reimbursement for a Code 1 drug for something else, it would need to submit a specific request with the reasoning for a non-approved use. Walmart pharmacists intentionally submitted claims without confirming the approved diagnosis and obtaining the necessary documentation or for non-approved uses.

jimi-filipovski-189724-copy-300x176There are currently two False Claims Act (FCA) qui tam cases against United Health Group (UHG) pending in the Central District of California. The cases are: U.S. ex rel. Benjamin Poehling v. UnitedHealth Group, Inc. and U.S. ex rel. Swoben v. Secure Horizons, et al. The cases were brought by James Swoben, who was previously an employee of Senior Care Action Network Health Plan and a consultant within the risk adjustment industry, and Benjamin Poehling, who was the former finance director of a UHG group that managed the insurer’s Medicare Advantage Plans.

The Qui Tam Cases Against UHG

On May 2, the U.S. intervened in the Swoben False Claims Act suit against UHG based on the allegations the insurer overcharged Medicare Advantage and prescription drug programs. In the DOJ’s complaint, it alleges the insurer knowingly ignored patients’ medical conditions to increase payments it received from Medicare and funded chart reviews to increase the risk adjustment payments it reviewed. However, any information the reviews uncovered regarding misdiagnoses were disregarded to avoid repaying Medicare.

daan-stevens-282446-copy-300x191The U.S. Department of Justice announced on June 28 that PAMC Ltd. and Pacific Alliance Medical Center Inc. have agreed to pay $42 million to settle allegations that they violated provisions of the False Claims Act. The two companies, which operate together as Pacific Alliance Medical Center in Los Angeles, allegedly had unlawful financial relationships with doctors.

Qui Tam Suit Against Pacific Alliance Medical Center

The qui tam lawsuit against the defendants was filed by Paul Chan, who was a manager with one of the defendant businesses. A qui tam suit is a civil lawsuit brought by a private citizen on behalf of the government. The private citizen, known as the relator during the suit, provides information regarding the claims that is not available to the public. If the government receives a settlement or jury award in relation to the relator’s allegations, then he receives part of the monetary recovery. In this case, Chan is set to receive more than $9.2 million.

daniel-frank-201417-copy-300x200CareCore 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.

jimi-filipovski-189724-copy-300x176The 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.

benjamin-child-17946-copy-300x200A 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.

freestocks-org-126848-1-copy-300x200The 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.

bob-brents-182206-300x240The 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.

 jimi-filipovski-189724-copy-300x176In 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.

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Based on documents from a qui tam lawsuit filed against numerous health insurance companies, it is clear that the U.S. Department of Justice is looking into allegations that major health insurers in the U.S. are overcharging Medicare. These insurers include UnitedHealth Group Inc., Health Net Inc., Aetna Inc., and Bravo Health Inc., which is part of Cigna Corp. You may recognize these as some of the largest insurance providers in the country. The U.S. has agreed to join the qui tam suit against UnitedHealth and declined to intervene in cases against the other insurers. However, the government has stated it will continue its investigation into the allegations against these other insurers separately.

The Beginning of this Qui Tam Action

The qui tam action based on the False Claims Act was filed by Benjamin Poehling in 2011. Poehling was previously an executive at UnitedHealth and alleges that major health insurers overstate how sick Medicare patients are to increase reimbursements by millions of dollars. Through the program known as risk adjustment or risk scoring, healthcare providers would state that numerous Medicare patients under Part C and Part C programs were treated for conditions they did not have or had, yet were not treated for – also known as upcoding. These particularly costly conditions that were coded increased a provider’s risk score and in turn, raised reimbursements from the government.