Whistleblower Paid $9,243,251 For Exposing False Claims Scheme


On June 7, 2012, the Department of Justice reported that it had recovered $34,234,263 from Orthofix Inc., a Texas-based manufacturer of medical devices, to settle allegations under the civil False Claims Act relating to the company’s sale of bone growth stimulator devices. The Justice Department awarded whistleblower Jeffrey Bierman $9,243,251 for his contribution in providing the U.S. Government with insider information on the false claims scheme. The Justice Department also announced that the company had agreed to plead guilty to a felony of obstruction of a federal audit and to pay a $7,765,737 criminal fine.

The whistleblower suit alleged that the “company improperly waived patient co-payments, thus misstating their true cost and resulting in overpayments by federal programs; paid kickbacks to physicians and their staffs in the form of “fitter fees,” referral fees and other comparable fees, to induce the use of Orthofix products; caused the submission of falsified certificates of medical necessity; and failed to advise patients of their right to rent rather than purchase Orthofix products.”

Stuart F. Delery, Acting Assistant Attorney General for the Civil Division stated that “the Justice Department has longstanding concerns about kickbacks and the routine waiver of co-payments, because they can impose significant costs on federal health programs that are not medically justified.” “The resolution of this matter yielded a substantial recovery for taxpayers, and should deter other companies from engaging in such conduct in the future.”

The Justice Department stated that the company’s criminal guilty plea involved its failure to disclose information concerning its practices regarding certificates of medical necessity to a Medicare contractor where five individual Orthofix employees previously plead guilty to criminal charges in connection with this matter. U.S. Attorney for the District of Massachusetts,Carmen M. Ortiz, stated that “this resolution, and the entire investigation, which has involved prosecution of a number of individuals, including a high level executive, demonstrates the government’s unflagging commitment to prosecuting corporate and individual medical device fraud, and particularly to protecting Medicare from those who prey on it by fraudulent means.”

Susan J. Waddell, Special Agent in Charge of the Office of Inspector General of the U.S. Department of Health and Human Services New England region stated that “criminals intent on placing profits from federal health programs over and above compliance should expect to tangle with authorities” and that “Orthofix blatantly ordered sales staff to disregard Medicare rules, and conveniently looked away when medical records were altered and even forged.”

The False Claims Act allows private citizens to act as whistleblowers and sue on behalf of the government and share in the amounts the government recovers through legal action.The False Claims Act allows the government to recover treble damages and $5,500 to $11,000 for each false or fraudulent claim filed. The whistleblower in this case was paid approximately 27% of the proceeds from the government settlement.Whistleblower rewards typically range from between 15-30% for claims brought under the False Claims Act.

Young Law Group, P.C., Attorneys-at-Law, represents whistleblowers nationwide. For a free confidential consultation, please call Eric L. Young, Esquire at 1-800-590-4116 or email to eyoung@young-lawgroup.com.

SOURCE: http://www.justice.gov/opa/pr/2012/June/12-civ-724.html

It’s Time for HHS to Set an Example


“Setting an example is not the main means of influencing another, it is the only means.”

Albert Einstein

Holding individuals criminally responsible for their actions or the actions of their corporations in defrauding our government health plans has been more difficult than one would imagine. There was once a time where he who stole from the King could suffer consequences as grave as death. However, it seems as though these days the majority of corporations simply account for civil penalties as a cost of doing business.One man would like that to change.

As written by Julian Pecquet, “The top Republican on the Senate Finance Committee wants the federal government to explain why the conviction rate for Medicare fraud is largely flat despite the millions recently spent to beef it up.” The Democratic Congress appropriated $198 million in discretionary funds for Medicare fraud prevention last year on top of an $11 million increase in mandatory spending. However, the number of criminal convictions fell slightly that year (from 588 to 583), prompting Sen. Charles Grassley (R-Iowa) to demand some answers in a letter he sent to the heads of the Health and Human Services and Justice departments.In his letter, Sen. Grassley states, “The decline in criminal cases filed, the stagnant number of criminal defendants, and the low level of actual convictions raise serious questions about how Department of Justice and Health and Human Services are allocating resources to combat criminal health care fraud.”

I await the response of government officials.Unless a firm example is established, corporations will continue to defraud the healthcare system as a cost of doing business.

Crankin’up the HEAT


HEAT is the rather odd acronym for the Health Care Fraud Prevention and Enforcement Action Team. It is the brainchild of Attorney General Holder and Health and Human Services Secretary Sebelius, and despite the great stretches of the imagination it takes to make it work as an acronym (HCFPEAT doesn’t exactly roll off the tongue), it seems to be taking a bite out of health care fraud.

HEAT is a coordinated effort between DOJ and HHS, and it has a Medicare Fraud Strike Force that has been going around various cities busting health care fraud perps. It’s operating in various locations, including South Florida, but no, you are not likely to see Attorney General Holder wearing a Miami Vice suit and driving a go-fast boat into a medical center.

In recent testimony given before the House Ways and Means Subcommittee on Health and Oversight, Edward Siskel, the Associate Deputy Attorney General, stated that since May 2009, the Strike Force has been putting fear in the hearts of health care fraudsters. Strike Force prosecutors have filed over 120 cases charging more than 290 defendants and have obtained 16 convictions. The Strike Force also appears to have had a deterrent effect. In the twelve months since the Strike Force was announced, the Miami area has seen an almost $2 billion reduction in durable medical equipment submissions compared to the preceding 12 month period.

Deputy AG Siskel also notes in his testimony statistics all too familiar to qui tamers: the bulk of the DOJ’s civil case load comprises suits against drug and medical device makers. Qui tam suits have proved to be an important weapon in the DOJ’s fraud-fighting arsenal, and have helped the government to recover $24 billion since 1986. This goes to show that the civil justice system is just as important as the swaggering Task Force in the fight against health care fraud.

This article is brought to you by the QTT, the epicenter for whistleblowers and people interested in the False Claims Act, Qui Tam Provisions, and Medicare and Medicaid fraud. To discuss a potential case, please call Eric Young at 1 (800) 590-4116.

A New Flavor: Ambulance Fraud


There is fraud at all stages of the health care delivery process, and as a settlement in a district court case in the Eastern District of New York emphasizes, even ambulance companies are trying to get a bigger piece of that Federal pie, courtesy of you the taxpayer.

The case is:

United States ex rel. Kaplan v. Metropolitan Ambulance & First-Aid Corp. et al., Civil Action No. 00-3010 (E.D.N.Y.).

According to allegations in a qui tam suit by the former CFO of one of the companies, Metropolitan Ambulance & First Aid Corp. (now known as SEZ Metro Corp.), Metro North Ambulance Corp. (now known as SEZ North Corp.) and Big Apple Ambulance Service Inc. (formerly known as United Ambulance), and the president of the companies, Steve Zakheim, used falsified records to appeal a Medicare refund demand. The situation is a bit convoluted, but what the companies were doing essentially consisted of the old health-care fraud standby: taking patients on unnecessary and expensive ambulance trips, and billing Medicare for the services. The government determined that these trips were in fact unnecessary and demanded a refund of the tens of millions of (tax payer) dollars that had been paid out. As is customary, an extensive appeals process was available.

However, Zakheim and his ambulance armada apparently didn’t have the required proof to back-up their case on appeal, so they allegedly doubled their fun/fraud by submitting hundreds of forged letters verifying that the ambulance trips were medically necessary! The ROI was not so good here: Zakheim and the companies must pay $2.5 million in settlement money, not to mention the millions of dollars to be refunded. Vigilant whistleblower Larry Kaplan will pocket $618,450.

One has to ask: was it really worth it to engage in the fraud in the first place? This is yet another case in which the business logic behind some of the decisions seems to have been seriously lacking. The next time you see an ambulance speeding along (possibly with a bunch of cash flying out the windows) keep in mind that it might be following the  road to fraud!

This article is brought to you by the QTT, the epicenter for whistleblowers and people interested in the False Claims Act, Qui Tam Provisions, and Medicare and Medicaid fraud. To discuss a potential case, please call Eric Young at 1 (800) 590-4116.

The River Styx Co-Pay


In Greek mythology, the River Styx served as the boundary between Earth and the Underworld. In order to cross the river, a dead person had to pay the ferryman, Charon, a fee. The ancients would place a coin in the mouth of the deceased in order to pay this fee, as it was believed that those unable to pay would never be able to cross into the underworld (and who really wants the semi-dead walking among us, anyway?).

According to a report in the New York Post, however, the dead seem to possess special powers that enable them to bill Medicaid for services, regardless of whether they are able to pay their way across the River Styx. A state audit conducted by the New York State Office of the Medicaid Inspector General (OMIG) has found that health-care providers allegedly billed Medicaid for services provided to 287 patients who were actually dead.

One glaring example of the health care fraud involved Bellevue Hospital in Manhattan, which accepted a dead Medicaid patient to harvest the cadaver’s organs, but then billed Medicaid for treatment.  According to the Post, other outrageous behavior included the following:

  • A dead patient’s Medicaid card was used at three dentists in a week;
  • Providers billed Medicaid for “scheduled patients” before actually treating them;
  • A family accepted delivery of a new bed paid for by Medicaid after the patient died;
  • A doctor requested delivery of his patient’s prescription to his office after she died.

Some of the providers claim the erroneous billing was the result of honest clerical errors, while others claim that they actually billed for the services while the patients were still alive. One pharmacy in Long Island billed Medicaid $28,000 for prescriptions written for 17 dead customers (“honest” clerical error?). In regard to clerical mistakes that result in Medicaid being charged for dead people’s treatment, Medicaid Inspector General Michael Sheehan observes

We don’t know how often it happens, but we think that it is a sign of general billing problems. What we tell people is, ‘If your billing system is so weak it bills for dead people, you are bound to have other billing problems, too.’

Those benefiting from billing Medicaid for dead folks run the gamut from big pharmacy chains to doctors to family members of the departed. Most people probably wouldn’t want to be remembered as a fraudulent Medicaid charge, making this type of fraud totally disrespectful to the dead (and, of course, the living taxpayers who foot the bill, too).

Former NBA Great Lucius Allen Blows the Whistle on Bristol-Myers Squibb


As reported by the Los Angeles Times here, California Insurance Commissioner Dave Jones announced Friday that his office had joined a previously sealed whistleblower lawsuit against the company, calling it the largest health insurance fraud case ever pursued by a California state agency.

Two of the three whistleblowers in the case are former Lakers player Lucius Allen and his wife, Eve, who worked for the drug company as employees and provided access to the basketball team, whose players participated in “Lakers Dream Camps” set up by the drug company for doctors and their family members, the lawsuit said. The lawsuit was filed in 2007 but was sealed until the state joined the case recently.

New York-based Bristol-Myers Squibb issued a statement: “Bristol-Myers Squibb believes this lawsuit has no merit and the company will defend itself vigorously.”

The case is the latest major legal action against Bristol-Myers Squibb over allegations of health care fraud. The pharmaceutical giant paid $515 million in 2007 to settle allegations by the federal government and other states that it used a kickback scheme to defraud the Medicare and Medicaid insurance programs, officials said.

The California lawsuit alleges that Bristol-Myers Squibb targeted the private insurance industry, making thousands of payments to “high prescribing doctors” who wrote prescriptions for its well-known drugs, including Plavix, Abilify and Pravachol.

Jones said that insurance companies in California had spent more than $3.5 billion to cover the costs of the drugs Bristol-Myers Squibb sought to promote through its kickback scheme.

“We need to be sure that doctors are prescribing drugs because those drugs are best for their patients and not because a pharmaceutical company provided doctors with trips and kickbacks,” Jones said. “These illegal practices drive up the cost of health insurance for millions of Californians.”

This is just another example of pharma companies illegally utilizing a “pay-to-play” strategy. The concept is simple, pay doctors and they will write scripts for our drugs. The concept is clearly illegal, drains taxpayer funds and most importantly creates serious patient harm issues. When choosing which drug to prescribe, the doctor’s primary concern should be the patients’ health and not the doctor’s bottom line!

McEldrew Young Purtell Merritt represents whistleblowers nationwide. For a free confidential consultation, please call Eric L. Young, Esquire at (215) 367-5151 to speak to one of our whistleblower lawyers.

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