Headlines that Matter for Companies and Executives in Regulated Industries

DOJ News

United States Intervenes in FCA Case Alleging Improper Copayment Waivers and Billing for Medically Unnecessary Equipment

The DOJ intervened in a FCA case alleging that Arriva Medical LLC (Arriva) and its parent Alere Inc. (Alere) charged Medicare for unnecessary equipment and paid kickbacks to Medicare patients by waiving their copayment obligations. The whistleblower suit was first filed in 2013 by a former sales representative. The government alleges that the mail-order supplier would require new customers to purchase a glucometer, even if they already had a functioning one, and then would bill Medicare for the medically unnecessary meters. The government also alleges that Alere would make no effort to collect the copayments from patients for the meters or related diabetic testing supplies. Waiving patient copays or giving something of value to induce patients to purchase a company’s items or services is prohibited by the Anti-Kickback Statute. The alleged conduct occurred before Alere was purchased by Illinois-based Abbott Laboratories in 2017.

The case is captioned United States ex rel. Goodman v. Arriva Medical LLC; Alere, Inc., Case No. 3:13-cv-00760 (M.D. Tenn.), and DOJ’s press release is here.

Government Files $6.4 Million FCA Suit Against Contractors for the National Nuclear Security Administration

The DOJ filed a FCA complaint against contractors of the National Nuclear Security Administrator (NNSA), a semi-autonomous agency within the US Department of Energy. NNSA operates facilities near Aiken, South Carolina, to supply and process tritium, a radioactive form of hydrogen that is a key component of nuclear weapons. Last week, the DOJ filed suit against CB&I AREVA MOX Services LLC (MOX Services) and Wise Services Inc. in connection with their government contracts to design and operate the MOX Fuel Fabrication Facility (MFFF) at the NNSA’s South Carolina location. MOX Services entered into a series of subcontracts with Wise Services between 2008 and 2016 to supply labor, materials, equipment, and supervision for certain construction activities supporting MOX Services’ efforts at the MFFF. The government’s complaint alleges that Wise Services falsely claimed $6.4 million in reimbursement under its subcontracts with MOX Services for construction materials that did not exist. The complaint also alleges that Wise Services’ employee paid kickbacks to MOX Services officials responsible for subcontracts.

The lawsuit is captioned United States v. CB&I AREVA MOX Services, LLC, et al.(D.S.C), and the DOJ’s press release is here.

Compounding Pharmacy and its Owners Settle Whistleblower Lawsuit Alleging Marketing Kickbacks

Florida-based Vital Life Institute LLC, formerly known as AgeVital Pharmacy LLC, and its owners agreed to pay at least $775,000 to resolve a whistleblower FCA case. The underlying qui tam case alleged that the pharmacy and its owners violated the FCA by engaging in an illegal kickback scheme to induce the referral of compounded drug prescriptions for TRICARE and Medicare beneficiaries. The defendants allegedly paid kickbacks to a third-party marketing company to solicit prospective patients for compounded drug prescriptions regardless of the patient’s medical need. The whistleblower FCA case was brought by a Medicare patient that received unwanted compounded medications from AgeVital.

The case is captioned United States ex rel. Knopf v. AgeVital Pharmacy, LLC et al., Case No. 8:15-cv-2591-T-36JSS (M.D. Fla.), and DOJ’s press release is here.

Michigan Patient Recruiter Pleads Guilty in $1.2 Million Kickback Scheme for Home Health Services

A patient recruiter in Michigan pled guilty last Friday in an unlawful kickback scheme involving approximately $1.2 million in fraudulent Medicare claims for home health care. The recruiter admitted that she received illegal kickbacks in exchange for referring Medicare beneficiaries to a home health agency from April 2015 to November 2017. In addition, the recruiter submitted bills to Medicare for beneficiaries that were not eligible to receive home health services. The case was jointly investigated by the FBI and HHS-OIG as part of the Medicare Fraud Strike Force.

The DOJ’s press release is here.

Jury Convicts Florida Doctor on 23 Counts of Health Care Fraud

A jury found Florida physician, Sheetal Kanar Kumar, M.D., of committing twenty-three (23) counts of health care fraud. Dr. Kumar, an obstetrician and gynecologist, owned and operated a medical practice for women’s health. The evidence introduced at trial demonstrated that Dr. Kumar submitted fraud claims to Medicare, Medicaid and private health insurance companies for items and services that were not provided as billed.

The DOJ’s press release is here.


HHS-OIG Audit Estimates $84 Million in Improper Skilled Nursing Facility Claims

The HHS-OIG published an audit report (A-05-16-00043) finding that CMS improperly paid skilled nursing facility (SNF) claims when the so-called 3-day rule was not met. To qualify for post hospitalization extended care such as SNF services, a Medicare beneficiary must have been an inpatient of a hospital for a medically necessary stay of at least 3 consecutive calendar days before being discharged from the hospital. From 99 sampled claims, the oversight unit found that 65 claims were improperly paid when the 3-day rule was not met. On the basis of the sample results, HHS-OIG estimates that CMS improperly paid $84 million for SNF services that did not meet the 3-day rule from 2013 to 2015.

The HHS-OIG report is available here, and a summary of the report is available here.

Other News

Texas Announces Record $235.9 Million Dental Medicaid Fraud Settlement

In the largest Medicaid-related case filed by the Texas Attorney General’s Office, Xerox Corporation (Xerox) and several of its former subsidiaries agreed to a $235.9 million settlement with the State of Texas. The settlement resolves a 2014 case brought under Texas’s version of the FCA, the Texas Medicaid Fraud Prevention Act. In 2003, the Texas Health and Human Services Commission contracted with Conduent Healthcare, which was later acquired by Xerox, for Medicaid-related claims administration and processing services. The company was required to have qualified dental professionals review requests from dentists and orthodontists for Medicaid coverage. Texas alleged that, between January 2004 and March 2012, the company rubber-stamped orthodontic prior authorization requests without assuring that the procedures were medically necessary. Texas initially sought more than $2 billion in recovery and penalties against Xerox defendants for approving expensive orthodontic work on thousands of beneficiaries who did not meet the Medicaid standard for braces. Although the settlement with Xerox and its affiliates is final, the State still has pending litigation against dental and orthodontic providers. The Xerox defendants did not admit to any wrongdoing as part of the settlement.

The Texas Attorney General’s press release announcing the settlement is here, and a copy of the settlement agreement is here.