Why it matters: This month, we cover a few of the recent False Claims Act (FCA) resolutions and actions involving the healthcare industry that caught our eye, including the DOJ's decision to intervene in part in a qui tam lawsuit brought against numerous Medicare Advantage healthcare insurers for overbilling Medicare in connection with risk adjustment data. Read on for a recap.
Detailed discussion: Below, we discuss some recent FCA actions and resolutions in the healthcare field that we found to be of interest:
DOJ intervention in qui tam lawsuit: On February 14, 2017, the DOJ filed a notice in the Central District of California of its decision to intervene in part in a qui tam lawsuit first filed under seal by the whistleblower relator in 2011 in New York federal court against UnitedHeath Group, Inc. (UnitedHealth), WellMed Medical Management (WellMed) and numerous other Medicare Advantage (MA) companies. The first amended complaint, which the DOJ ordered unsealed, alleged that since 2006 the named MA insurers had systematically overbilled Medicare by, among other things, submitting false certifications to the Centers for Medicare & Medicaid Services in connection with risk adjustment data in violation of the FCA. The DOJ intervened in the lawsuit only with respect to UnitedHeath and WellMed (declining to intervene with respect to the other named MA insurers) "[b]ased on their submission … of false or fraudulent claims for and false statements relating to Risk Adjustment payments under Parts C and D of the Medicare Program and with respect to their retention of overpayments arising from those false or fraudulent claims and false statements." The DOJ is due to file its complaint against UnitedHealth and WellMed within 90 days. The case is US ex rel. Poehling v. UnitedHealth Group et. al (Case No. 16- cv-08697 -MWF, C.D. Cal.).
Illegally imported chemotherapy drugs: On February 16, 2017, the U.S. Attorney's Office for the District of New Jersey announced that New Jersey doctor Kenneth D. Nahum, his self-named oncology practice (practice), and his wife (who managed the practice) agreed to pay $1.7 million to resolve FCA allegations that they "illegally imported and used unapproved chemotherapy drugs from foreign distributors and illegally billed Medicare." The DOJ said that, from April 1, 2010 to January 31, 2011, the defendants allegedly ordered chemotherapy drugs that had not been approved by the FDA for sale in the U.S. from a foreign distributor for use at their practice. The doctors at the practice allegedly injected the drugs into their patients, for which the practice then submitted claims to Medicare for reimbursement for the drugs and infusion services. According to the DOJ, "[s]ince Medicare will only reimburse for drugs that have been approved for use in the United States, the practice allegedly violated the federal False Claims Act." The defendants agreed to the settlement without admitting or denying liability. No qui tam whistleblower was mentioned.
Up-coding: On February 6, 2017, the DOJ announced that "major U.S. hospital service provider" TeamHealth Holdings (TeamHealth), successor-in-interest to IPC Healthcare Inc., f/k/a IPC The Hospitalists Inc. (IPC), agreed to pay $60 million to resolve allegations that IPC violated the FCA by "billing Medicare, Medicaid, the Defense Health Agency and the Federal Employees Health Benefits Program for higher and more expensive levels of medical service than were actually performed (a practice known as 'up-coding')." According the DOJ's allegations, which were neither admitted nor denied by IPC, IPC "knowingly and systematically" encouraged its hospital doctors to falsely bill for a higher level of service than actually provided. The DOJ said that "IPC's scheme to improperly maximize billings allegedly included corporate pressure on hospitalists with lower billing levels to 'catch up' to their peers." As part of the settlement and in addition to paying the $60 million, TeamHealth entered into a five-year Corporate Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) covering the company's hospital medicine division which is "designed to increase TeamHealth's accountability and transparency so that the company will avoid or promptly detect future fraud and abuse." Qui tam whistleblower to receive award of $11.4 million.
More Tenet fallout: As a follow-up to our coverage of the DOJ's October 2016 resolution with Tenet Healthcare Corporation (Tenet) pursuant to which Tenet agreed to pay $513 million to resolve criminal charges and civil FCA claims (see our November 2016 newsletter under "Spotlight on the False Claims Act"), on February 1, 2017, the DOJ announced that former Tenet senior executive John Holland was indicted for his alleged role in the "over $400 million scheme to defraud" which "victimized the U.S. government, the Georgia and South Carolina Medicaid Programs, and prospective patients of Tenet hospitals." According to the indictment, while serving as a senior vice president of operations for Tenet's Southern States Region and as chief executive officer of North Fulton Medical Center Inc. (NFMC) from 2000 through 2013, Holland "engaged in a scheme to defraud the United States, and the Georgia and South Carolina Medicaid Programs, by causing the payment of bribes and kickbacks in return for the referral of patients" to NFMC and other Tenet hospitals located in Georgia and South Carolina. In addition, the indictment alleged that Holland "took affirmative steps to conceal the scheme including by circumventing internal accounting controls and falsifying Tenet's books, records and reports." The DOJ alleged that "these kickbacks and bribes helped Tenet bill the Georgia and South Carolina Medicaid Programs over $400 million, and Tenet obtained more than $149 million in Medicaid and Medicare funds based on the resulting patient referrals, the indictment alleges." The indictment also alleged that Holland made "false and fraudulent statements" to HHS-OIG in connection with Tenet's 2006 Corporate Integrity Agreement, including certifying that Tenet was in compliance with the terms of participation in the Medicare and Medicaid Programs and the terms of the CIA "when in fact he knew that Tenet was paying for illegal patient referrals."