The Federal Government has been busy again – in the past few weeks there has been a flurry of False Claims activity involving health care providers. Below is a timeline and summary of recent settlements of interest.

November 24, 2009 – Connecticut Physician Practice Settles Medicare Billing Matter Voluntarily Disclosed to the Government

On November 24, 2009, the U.S. Attorney’s Office for the District of Connecticut announced a settlement with a physician practice, Thomas Greco, M.D., P.C., in which Dr. Greco’s practice agreed to pay $99,886.86 to resolve allegations that he billed federal health care programs for infusion therapy services that were not rendered. The actual amount overpaid was $66,591.24, and because the physician practice self-disclosed the billing violation to the Government and fully cooperated in the investigation, a multiplier of 1.5 (instead of 2-3 three times the damages, as permitted under the FCA) was applied.

This case and the relatively low settlement amount underscores the benefit of voluntarily disclosing violations of law that a health care provider discovers rather than waiting for the Government (or a whistleblower) to find them on its own.

December 1, 2009 - Sports Medicine Clinic to Pay $3 Million to Settle Kickback Allegations Involving HealthSouth

On December 1, 2009, the Department of Justice issued a press release announcing that Kerlan Jobe Orthopaedic Clinic, a sports medicine clinic in Los Angeles, has agreed to pay $3 million to resolve allegations that it received kickback from HealthSouth Corporation. According to DOJ, in exchange for Kerlan Jobe’s referrals to HealthSouth facilities, HealthSouth paid kickbacks in the form of stock option grants, donations to the clinic’s foundation, loan forgiveness on an equipment lease, and a disproportionately high ownership interest in a joint venture ASC. This settlement is the second settlement related to the same conduct. In December 2007, DOJ settled with HealthSouth for approximately $14.7 million to resolve HealthSouth’s liability for paying illegal kickbacks to Kerlan Jobe and an Alabama sports medicine clinic. Interestingly, HealthSouth self-disclosed the kickback violations to the Government.

The fact that the Government pursued an enforcement action against Kerlan Jobe for receiving the kickbacks after resolving its case with HealthSouth, the payor of the kickbacks, shows that the Government takes kickback allegations seriously, and the potential influence that kickbacks have on the judgment and decision-making of health care providers.

December 2, 2009/December 15, 2009 - Two Medicare FCA Settlements Involving “Outlier Payments”

Mercy Medical Center - $400,000 Settlement

On December 2, 2009, the United States Attorney’s Office for the Northern District of Iowa announced a settlement with Mercy Medical Center. The settlement resolves allegations that Mercy received excessive Medicare inpatient outlier payments by fraudulently reporting inflated charges for certain inpatient heart procedures. Mercy also submitted false and misleading statements involving Medicare and Medicaid cost reports for its Oakland Memorial Hospital, specifically, that Mercy sought reimbursement for non-allowable costs included in Oakland’s 2003 – 2006 Medicare and Medicaid cost reports.

Our Lady of Lourdes Health Care Services - $7.95 Million Settlement

On December 15, 2009, the DOJ announced another settlement involving allegations that two New Jersey hospitals gamed the Medicare payment system to obtain enhanced Medicare reimbursement by fraudulently qualifying for outlier payments by reporting inflated charges to Medicare patients. The hospitals, Our Lady of Lourdes Medical Center and Lourdes Medical Center of Burlington County, both belong to the same parent company, Our Lady of Lourdes Health Care Services, Inc., and collectively agreed to pay $7.95 million to settle a whistleblower lawsuit brought by Tony Kite, the same whistleblower that has brought a number of other whistleblower cases involving Medicare outlier payments. Mr. Kite will receive $356,000, plus interest, as his share of the recovery.

Over the years, the Government has recovered hundreds of millions of dollars from health care providers accused of gaming the Medicare reimbursement system to obtain enhanced reimbursement. Manipulation of the outlier payment system is just the latest way providers have done this. These settlements, and the many that have come before and that will come later, should serve as a signal to hospitals and other health care providers that they should be wary of billing practices touted by consultants and other individuals which purport to take advantage of loopholes in the Medicare program.

December 8, 2009 - Meijer Inc. Pays $3 Million As a Result of Voluntary Disclosure That It Employed Four Excluded Pharmacists

On December 8, 2009, DOJ announced a settlement with Meijer Inc. pursuant to which Meijer will pay the Government $3 million. Meijer self-disclosed to the Government that it had employed four pharmacists excluded from participation in federal health care programs between 1997 and 2006, in violation of federal law. Those pharmacists had processed prescriptions for which Meijer received reimbursement from federal payors, including Medicare, Medicaid, and TriCare. In the DOJ press release, the Government emphasized that Meijer had avoided much more severe penalties by voluntarily disclosing the matter to the Government. Information about the OIG’s Provider Self-Disclosure Protocol (SDP) can be found on the OIG’s SDP webpage.

This settlement should serve as a reminder to health care providers participating in federal health care programs (Medicare, Medicaid, TriCare) that they should be checking the OIG’s List of Excluded Individuals, oth at the time of hiring or commencement of a contractual relationship with an individual or entity, and at least annually thereafter, to ensure that the individuals and entities providing services to or on behalf of their organizations are not excluded from participating in federal health care programs. The potential penalty for employing or contracting with an excluded party is the recoupment of all Medicare, Medicaid, and TriCare payments for everything that the excluded person furnished, ordered, or prescribed. This can result in a huge overpayment, depending on the length of time and the type of services provided by the excluded party. The Meijer settlement highlights the value of the OIG’s SDP in obtaining favorable settlement amounts for providers that self-disclose such conduct through the OIG’s SDP.

December 17, 2009 – NY Home Health Agencies to Pay $24 Million to Resolve FCA Allegations Brought by Whistleblowers

On December 17, 2009, the DOJ announced that it had settled FCA cases with three New York home health agencies (HHAs), Nursing Personnel Home Care (Nursing Personnel), Extended Home Care (Extended), and Excellent Home Care (Excellent) for a total of $24 million. The Government had alleged that Nursing Personnel knowingly supplied home health aides with fake training certificates to Extended and Excellent, which then billed New York’s Medicaid program for services provided by untrained aides in violation of New York Medicaid program rules. Under the settlement, New York’s Medicaid program will recover $14.3 million and the United States will receive $9.7 million. The cases against the HHAs were brought by two whistleblowers, Maurice Keshner, who filed the qui tam lawsuit against Nursing Personnel and will receive $251,107 as his share of the recovery, and Deborah Yannicelli, a former accountant at Excellent who was fired for alerting her bosses to the fraud and then filed the qui tam lawsuit against Extended and Excellent and will receive $1,663,040 as her share of the recovery.

This settlement should remind health care providers to pay attention to employees and other individuals who alert them to possible fraud or other wrongdoing within their organizations. These individuals, if ignored, often become the whistleblowers in qui tam lawsuits when health care providers choose not to heed their warnings and, even worse, retaliate against such individuals for raising the concerns in the first place.