The holiday season wasn’t a quiet time for the Federal Government as a number of interesting settlements involving health care providers happened in the last two weeks of the year. Below is a timeline and summary of recent settlements of interest.

December 29, 2009 – Spectranetics – a Medical Device Maker – Settles False Claims Act Case for $5 Million

On December 29, 2009, the United States Attorney’s Office for the District of Colorado announced that Spectranetics agreed to pay $5 million to settle allegations that Spectranetics illegally imported unapproved medical devices and provided them to physicians for use in patients. According to the government, this resulted in the filing of false Medicare claims by those physicians between 2003 and 2008. The government also alleged that a Spectranetics clinical trial called CORAL did not meet federal standards. To resolve this matter and avoid criminal prosecution, Spectranetics entered into a civil settlement agreement and a non-prosecution agreement with the United States as well as a Corporate Integrity Agreement with the Office of the Inspector General.

This settlement highlights the benefit of cooperating with the Government in its investigations. By doing so in this case, Spectranetics avoided criminal prosecution for the illegal importation of its devices, retained the ability to participate in federal health care programs, and negotiated a relatively low-dollar settlement amount.

December 28, 2009 – Michigan Health System Settles FCA Lawsuit Involving Allegations of Upcoding E/M Services for $669,413

On December 28, 2009, the Department of Justice (DOJ) announced a settlement with Michigan-based Genesys Health System, resolving allegations that Genesys violated the False Claims Act (FCA) by overbilling for evaluation and management services provided to cardiology patients. The settlement covers conduct that occurred between 2001 and 2007. The lawsuit was filed by a whistleblower, who media reports described as a “contracted auditor.” The whistleblower will receive $133,882 as her share of the settlement. More information on the case can be found at http://www.justice.gov/opa/pr/2009/December/09-civ-1384.html.

This case highlights the need for hospitals to regularly conduct internal audits of their claims and to refund any overpayments identified. If the hospital system had caught this billing issue on its own, it might have been resolved as a simple overpayment rather than as a FCA violation with the potential for double or treble damages plus penalties.

December 23, 2009 – Boston Scientific To Pay $22 Million to Resolve Kickback Allegations

On December 23, 2009, the DOJ announced a settlement with Boston Scientific to resolve allegations that its Guidant division paid kickbacks to physicians to get those physicians to use Guidant heart devices instead of those of competitors. According to the DOJ, Guidant paid $1000 to $1500 to physicians during 2003 and 2004 to participate in studies that the government alleged were designed to increase sales of Guidant pacemakers and defibrillators. According to the government, Guidant targeted physicians who used competitors’ pacemakers and defibrillators for the studies, hoping the payments would induce them to use Guidant devices. Under the terms of the settlement, Boston Scientific agreed that its cardiac rhythm management division will publicly disclose payments to physicians on a website. In addition, Boston Scientific also entered into a CIA with the OIG. Find out more about the settlement at http://bostonscientific.mediaroom.com/index.php?s=43&item=885.

Given that the allegations in this case reflect an intent by Guidant to influence physician decision-making as to which cardiac devices to use on their patients, we would expect to see the Government pursue the physicians who accepted the kickback payments in the near future to drive home the message that this type of conduct is unacceptable.

December 23, 2009 – Visiting Physicians Association Settling FCA Allegations Related to Billing for Unnecessary Services for $9.5 Million

On December 23, 2009, the DOJ announced, that the Visiting Physicians Association will pay $9.5 million to the United States and the State of Michigan to resolve allegations it submitted false claims to the Medicare, Medicaid and TRICARE programs when it billed for unnecessary home visits and care plan oversight services, unnecessary tests and procedures, and higher level E/M services than were actually provided.

This settlement actually resolves four separate qui tam lawsuits that were filed against Visiting Physicians Association. The four whistleblowers will share approximately $1.7 million.

This settlement should serve as a reminder to providers to audit their claims on a regular basis. Although there has been much focus on high-dollar pharmaceutical company settlements and settlements stemming from violations of the Stark Law and Anti-Kickback Statute, this case is evidence that the government is still actively pursuing traditional Medicare/Medicaid fraud cases, and the size of the settlement amount shows that the government takes these cases seriously.

December 22, 2009 – Oklahoma Hospital System Resolves Stark/Kickback Problems It Voluntarily Disclosed to the OIG for $13 Million

On December 22, 2009, the DOJ announced a $13 million settlement with St. John Health System of Tulsa, Okla., of alleged violations of the Stark Law and Anti-Kickback Statute, which St. John voluntarily disclosed to the OIG in April 2008. According to the DOJ press release, http://www.justice.gov/opa/pr/2009/December/09-civ-1376.html, St. John made payments to 23 individual physicians and physician groups to induce them to refer patients to St. John’s hospitals in violation of both the Stark Law and the Anti-Kickback Statute. The government alleged that the Medicare and Medicaid claims that St. John submitted as a result of referrals by those 23 physicians and physician groups were “tainted” by the noncompliant financial relationships.

Although the settlement amount is substantial, it is likely a small percentage of what the Stark damages alone would have been if St. John had not voluntarily disclosed this matter to the government through the OIG’s Provider Self-Disclosure Protocol. Information about the OIG’s Provider Self-Disclosure Protocol can be found at http://www.oig.hhs.gov/fraud/selfdisclosure.asp.

December 21, 2009 – Trinity Health Pays $205,000 to Settle FCA Qui Tam Lawsuit

On December 21, 2009, the DOJ announced that Trinity Health had agreed to pay $205,000 to resolve allegations that its hospital, St. Joseph Mercy Oakland Hospital, had improperly billed Medicare for medical services performed by nurse practitioners, clinical nurse specialists and physician assistants, which it billed as if they were performed by either a neonatologist or an oncologist. http://www.justice.gov/usao/mie/press/2009/2009-12-21_trinityhealth.pdf This lawsuit was filed by a whistleblower who had previously been the director of physician billing for the hospital and who will receive almost $95,000 ($60,000 of which was to settle personal causes of action she may have had against the hospital) plus her attorney’s fees, for bringing the successful case.

As this case shows, even a relatively low-dollar value billing problem can prompt a whistleblower complaint. This highlights the importance of having an effective compliance program that encourages internal reporting of suspected problems as well as the importance of responding appropriately, without retaliation, when an employee raises compliance concerns.