Retina Institute Settles with Government for $6.65 Million Over Allegations of False Claims Act Violations

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On October 2, 2019, Retina Institute of California Medical Group (RIC), along with its former CEO and several physicians, agreed to pay $6.65 million to resolve allegations of False Claims Act violations. RIC is a medical partnership of ophthalmologists with multiple locations in California. The medical group was alleged to have defrauded government health care programs by billing for unnecessary exams, improperly waiving Medicare copayments, and other regulatory violations. Eric Young, managing partner of McEldrew Young Purtell’s whistleblower practice, worked on the case with attorneys from the law firm of Berger Montague.

The case, United States ex rel. Smith and Rogers v. Chang, No. 13-CV-3772-DMG (C.D. Cal.), was filed in May 2013. The complaint was unsealed in July 2016 after the government elected not to intervene in the case. The two Relators were both former employees of RIC who provided substantial documentation to support allegations in the complaint. Bobette Smith was the CEO of the practice group from June 2012 to January 2013, and Susan Rogers worked as the manager of the billing department over the same six month period. The allegations in the complaint were based on information discovered by the Relators during the course of their employment, as well as their personal observations and investigation into what they believed to be fraud against the federal government and the State of California.

Routine Waiver of Medicare Deductibles and Copayments Can Result in False Claims Act Violations

Medical service providers are required to collect copayments and deductibles from all Medicare beneficiaries, except in specific cases of financial hardship. Any incentive that generates improper referrals, particularly where a medical service provider offers free or discounted items or services to Medicare beneficiaries, or promotes overutilization of medical services can constitute the submission of false claims to the federal government. Thus, a service provider that routinely waives cost-sharing amounts for Medicare beneficiaries, but bills Medicare for the full allowable amount, can be face substantial penalties under the False Claims Act.

The Office of Inspector General for the Department of Health and Human Services set forth detailed guidance on this issue back in 1994:

“Routine waiver of deductibles and copayments by charge-based providers, practitioners or suppliers is unlawful because it results in (1) false claims, (2) violations of the anti-kickback statute, and (3) excessive utilization of items and services paid for by Medicare.

*  *  *  *

A provider, practitioner or supplier who routinely waives Medicare copayments or deductibles is misstating its actual charge. For example, if a supplier claims that its charge for a piece of equipment is $100, but routinely waives the copayment, the actual charge is $80. Medicare should be paying 80 percent of $80 (or $64), rather than 80 percent of $100 (or $80). As a result of the supplier’s misrepresentation, the Medicare program is paying $16 more than it should for this item.

In certain cases, a provider, practitioner or supplier who routinely waives Medicare copayments or deductibles also could be held liable under the Medicare and Medicaid anti-kickback statute . . . When providers, practitioners or suppliers forgive financial obligations for reasons other than genuine financial hardship of the particular patient, they may be unlawfully inducing that patient to purchase items or services from them.

One important exception to the prohibition against waiving copayments and deductibles is that providers, practitioners or suppliers may forgive the copayment in consideration of a particular patient’s financial hardship. This hardship exception, however, must not be used routinely; it should be used occasionally to address the special financial needs of a particular patient. Except in such special cases, a good faith effort to collect deductibles and copayments must be made. Otherwise, claims submitted to Medicare may violate the statutes discussed above and other provisions of the law.”

Retina Institute’s Alleged Systematic Waiver of Medicare Copayments and Deductibles

According the allegations in the complaint, the defendants attempted to induce referrals by routinely waiving Medicare copayments and deductibles for patients without properly investigating or documenting their financial status. In order to disguise the practice, the defendants sometimes allegedly had patients complete a financial hardship form; however, most deductible and copayment waivers were allegedly granted without the completed form. On those limited occasions when the form was used, patients often signed the forms, allegedly without providing any information regarding their financial status.

A ophthalmologist who maintained a general practice near one of RIC’s locations allegedly told an RIC ophthalmologist he expected that copays for Medicare patients to be waived, and that he would not refer patients if copays were not waived. The Relators had records which identified the patients who were referred to RIC by this particular ophthalmologist. The documents showed the receipts for those patients amounted to only 80% of the Medicare allowable amount. Without consideration of financial hardship or any documents to verify such designations, the copayments for these patients were allegedly waived as a matter of course.

Relators independently investigated several patients whose records indicated a financial hardship waiver. They discovered that some of those patients lived in expensive homes, including one residence valued in the millions of dollars.

The Relators each separately explained to Dr. Tom Chang, one of RIC’s physician/owners, that the policy and practice of routinely waiving Medicare copays and deductibles did not comply with Medicare regulations. Dr. Chang allegedly responded, on more than one occasion, that he would prefer to continue using the financial hardship waivers to ensure that RCI did not lose any referrals or patients. Dr. Chang allegedly said he would simply pay the fines if Medicare ever learned about the practice. In light of his former position as a Medicare compliance officer for the Department of Ophthalmology at the University of Southern California School of Medicine, Dr. Chang’s alleged comments and lack of concern are quite noteworthy.

Relator Smith made several attempts to advise RIC’s partners about changing the manner in which financial hardship cases were handled. She even made a presentation to the RIC senior management team and Executive Committee warning of the potential adverse consequences of continuing with the current practice. During the presentation, Dr. Chang allegedly repeated that he would pay the fines if Medicare ever discovered the way in which RCI handled the waivers.

The History and Purpose of the Anti-Kickback Statute

The Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b) (“AKS”), prohibits any person or entity from offering, making, soliciting, or accepting remuneration, in cash or in kind, directly or indirectly, to induce or reward any person for purchasing, ordering, or recommending or arranging for the purchasing or ordering of federally-funded medical goods or services. The statute was enacted in 1972 to address concerns that remuneration provided to those who influence health care decisions would result in services that were medically unnecessary, of poor quality, or harmful to a vulnerable patient population. Congress therefore passed the AKS to prohibit the payment of kickbacks in any form. The statute was amended in 1977, and again in 1987, to ensure that kickbacks could not be disguised as legitimate transactions to circumvent the law.

Retina Institute’s Alleged Violations of the Anti-Kickback Statute

A physician who refers a patient for medical services to an entity in which the physician has a financial interest violates the AKS unless the referral falls within the “safe harbor” regulations.

The physician defendants named in the complaint had financial ownership interests in an ambulatory surgery center known as the San Gabriel Surgery Center. Those physician defendants, as well as other RIC physicians, routinely referred RIC patients in need of surgery to the San Gabriel Surgery Center.  Such referrals would only be covered by the safe harbor regulations if the physician’s investment interest was fully disclosed to the patient.

According to the allegations in the complaint, RIC physicians did not advise their patients that RIC principals had an investment interest in the San Gabriel Surgery Center.  Patients were allegedly given a brochure instead that stated, “The ownership for San Gabriel Ambulatory Surgery Center may be obtained by contacting the center at (626) 300 – [XXXX].”

In order to ascertain whether accurate information was disseminated, Relator Smith asked the scheduling agent at RIC to call the phone number on the brochure to learn who owned the surgery center. The scheduling agent allegedly reported to Relator Smith that the individuals who responded to the call could not provide any information about the ownership of the center nor could they find anyone who could answer the question.

The Government Relies on the Assistance of Whistleblowers

This case illustrates the important role that whistleblowers play in identifying and reporting fraud.  Due to the enormity of claims processed under government-funded health care programs, it is impossible for every instance of fraud to be detected.  Employees are often in the best position to observe fraud and gather evidence to corroborate their observations. The government depends on such individuals to come forward and report what they reasonably believe to be fraud.

The False Claims Act permits a private individual to sue on behalf of the United States and share in any recovery. The government may intervene in the action, in which case a Relator may receive a reward of 15 percent to 25 percent of any monetary recovery.  In cases such as this one, where the government declines to intervene, the whistleblower may pursue the action on their own and can receive a reward of 25 percent to 30 percent of any monetary recovery.

If you have evidence of fraud being committed against the government by an employer, business competitor or contractor, call the experienced whistleblower attorneys McEldrew Young Purtell at (215) 367-5151 for a free, no-obligation consultation.

DOJ Aggressively Pursues Health Care Fraud in 2019

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In the first half of 2019, the United States Department of Justice (“DOJ”) has shown that it intends to aggressively pursue health care providers who engage in fraudulent schemes to enrich themselves at the expense of their patients and American taxpayers. The DOJ has been especially diligent in its investigation and prosecution of health care providers who receive kickbacks and other improper incentives, as well as those on the other side of the transaction who make the illegal payments.

Recent DOJ Settlements Involving Health Care Providers

A review of the 2019 DOJ press release headlines offers insight into the scope and pervasiveness of illegal practices that some health care providers allegedly engage in:

  • Avanti Hospitals LLC, and Its Owners Agree to Pay $8.1 Million to Settle Allegations of Making Illegal Payments in Exchange for Referrals – January 28, 2019
  • Pathology Laboratory Agrees to Pay $63.5 Million for Providing Illegal Inducements to Referring Physicians – January 30, 2019
  • Covidien to Pay Over $17 Million to The United States for Allegedly Providing Illegal Remuneration in the Form of Practice and Market Development Support to Physicians – March 11, 2019
  • MedStar Health to Pay U.S. $35 Million to Resolve Allegations that it Paid Kickbacks to a Cardiology Group in Exchange for Referrals – March 21, 2019
  • United States Files Lawsuit Against West Virginia Hospital, Its Management Company, and Its CEO Based on Kickbacks and Other Improper Payments to Physicians – March 25, 2019
  • Former CEO of Hospital Chain to Pay $3.46 Million to Resolve False Billing and Kickback Allegations – April 30, 2019
  • Pharmaceutical Company Agrees to Pay $17.5 Million to Resolve Allegations of Kickbacks to Medicare Patients and Physicians – April 30, 2019
  • Rialto Capital Management and Current Owner of Indiana Hospital to Pay $3.6 Million to Resolve False Claims Act Allegations Arising from Kickbacks to Referring Physicians – June 3, 2019

The DOJ’s Arsenal in the Fight Against Health Care Fraud

Three statutes are most often implicated in fraud and abuses cases involving health care providers are the False Claims Act, 31 U.S.C. §§ 3729-3733 (“FCA”); the Anti-Kickback Statute 42 U.S.C. § 1320a-7b(b) (“AKS”); and the Physician Self-Referral Law, 42 U.S.C. § 1395nn (commonly known as the “Stark Law”).

The False Claims Act

The federal False Claims Act, 31 U.S.C. §§ 3729-3733, authorizes a private individual, known as a “relator,” to bring a cause of action on behalf of the federal government to recover funds lost because of fraud or other misconduct. A lawsuit filed under the False Claims Act is known as a qui tam action, and it allows a relator to sue on behalf of the government and, if successful, receive a percentage of the recovery.

The FCA was signed into law by President Lincoln during the Civil War. It was originally intended as means to legally pursue unscrupulous contractors who defrauded the Union Army by selling inferior goods, such as sawdust mixed with gunpowder, crippled horses, and boots made of cardboard. Even today, the FCA remains one of the most effective and important tools to prevent the government from purchasing overpriced, inferior, or nonexistent goods or services.

Most FCA violations in the health care industry arise from the submission of false or fraudulent claims for payment to government-funded health care programs, such as Medicare, Medicaid, CHAMPVA, and TRICARE. The civil penalties for violations of the FCA can be substantial. The filing of false claims can result in fines of up to three times the amount of the government’s losses, plus a penalty ranging from $11,463 to $22,927 for each false claim submitted. If a health care provider submits a claim to the government that resulted from a kickback or Stark law violation, it can also render the claim false or fraudulent.  This, in turn, creates liability under the FCA, in addition to liability under the AKS or Stark law. Some examples of FCA violations involving health care providers can be found here.

The FCA’s whistleblower provision allows a relator to file a lawsuit on behalf of the United States. If the government makes a successful recovery based on original information provided by a whistleblower, the whistleblower may be entitled to a reward of 15 to 30% of the government’s recovery.

The Anti-Kickback Statute

The Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b), prohibits offering, paying, soliciting, or receiving “remuneration” to induce referrals of items or services covered by Medicare, Medicaid, and other federally-funded health care programs. The AKS is a criminal law that involves any item or service payable by a federal health care program (e.g., drugs, supplies, or health care services for Medicare or Medicaid patients). “Remuneration” includes anything of value and can include items other than cash, such as free rent, expensive hotel stays and meals, and excessive compensation for medical directorships or consulting services.

In certain sectors of the economy, a reward given to someone for a business referral is a commonly accepted and legal practice. However, compensation paid to someone for a referral involving a federal health care program is a crime. The AKS applies to both those who offer or pay remuneration as well as those who solicit or receive remuneration. Since an AKS violation can result in criminal liability, the intent of each party to the transaction is a critical element to determining culpability.

United States v. Greber, 760 F.2d 68 (3rd Cir. 1985) is a landmark case which held that paying a referring physician to use a laboratory’s services, even if the remuneration was compensation for professional services, was a violation of the AKS. Greber was a physician who was board certified in cardiology. Greber’s company, Cardio-Med, Inc., provided diagnostic services, some of which were billed to Medicare. The government eventually charged Greber with, inter alia, Medicare fraud in violation of 42 U.S.C. § 1395nn(b)(2)(B). The charges were based on Cardio-Med’s practice of paying kickbacks from Medicare funds to referring physicians in order to obtain future referrals. Greber claimed that the payments were for work performed by physicians, and future referrals were only one purpose of the payments. Greber was convicted, and he appealed. The Third Circuit affirmed the conviction, holding that a payment to a referring physician is illegal if it is done to encourage future referrals, even if the payment is compensatory. 760 F.2d at 72.

The policy reasons underlying the AKS are based on the premise that kickbacks exploit the health care system, drive up costs for medical services, and impede fair competition in the industry. Kickbacks can also result in patient steering, which can compromise the decision-making process of health care providers and institutions. Hospitals that participate in the Medicare program, or other federally-sponsored health care programs, are required to enter into contracts in which they agree to comply with federal laws and regulations, including the AKS.

Although the AKS is a criminal statute, it provides both criminal and civil penalties for violations. The criminal penalties can include fines of up to $25,000 and five years’ imprisonment for each violation. The Office of the Inspector General for the Department of Health and Human Services can pursue civil penalties of up to $50,000 per violation plus three times the amount of sustained by the government.

The Physician Self-Referral Law

The Physician Self-Referral Law or Stark Law, 42 U.S.C. § 1395nn, prohibits a physician from referring patients for certain “designated health services” payable by Medicare to an entity with which the physician, or his or her immediate family member, has a financial relationship, unless one of a number of specific exceptions applies. A financial relationship can include ownership or investment interests, or compensation arrangements between a physician, or immediate family, and an entity that furnishes designated health services.

Designated health services include:

  • Clinical laboratory services;
  • Physical therapy, occupational therapy, and outpatient speech-language pathology services;
  • Radiology and certain other imaging services;
  • Radiation therapy services and supplies;
  • DME and supplies;
  • Parenteral and enteral nutrients, equipment, and supplies;
  • Prosthetics, orthotics, and prosthetic devices and supplies;
  • Home health services;
  • Outpatient prescription drugs; and
  • Inpatient and outpatient hospital services.

The Stark law is a strict liability statute, which means that a physician does not have to possess the specific intent to violate the law. Much like the AKS, the Stark Law is intended to ensure that a physician’s medical judgment is based only on the best interests of the patient and is not swayed by improper financial incentives.

Penalties for Stark law violations can include:

  • Denial of payment – Medicare will not pay for designated health services that were provided pursuant to a prohibited referral.
  • Refund of payment – Any entity that collects payment for designated health services that were provided pursuant to a prohibited referral must refund all such payments.
  • Imposition of civil monetary penalties – a civil monetary penalty of up to $15,000 can be imposed for each prohibited service, as well as additional civil assessments and potential liability under the False Claims Act.
  • Exclusion from federal health care programs — Physicians and entities can be excluded from participation in government-sponsored health care programs.

The Necessity of Whistleblowers

The government lacks the resources to identify and prosecute every instance of fraud carried out by unscrupulous physicians, medical equipment providers or hospitals. Many settlements and successful verdicts reported by the DOJ are often based on information provided by a whistleblower willing to come forward after hearing or witnessing some type of improper conduct. In the health care sector, a whistleblower is often a current or ex-business partner, a hospital or office staff member, a patient, or a business competitor.

Anyone who is an “original source” of information involving fraud against the government can be a whistleblower. As defined in the False Claims Act, original source means “an individual who either (i) prior to a public disclosure . . . has voluntarily disclosed to the Government the information on which allegations or transactions in a claim are based, or (2) who has knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions, and who has voluntarily provided the information to the Government before filing an action under this section.” 31 U.S.C. § 3730(e)(4)(B).

There are many pitfalls to filing a whistleblower claim with a government department or agency. Without proper legal representation, a whistleblower might not receive a reward even though he or she provided information and assisted the government in the investigation that resulted in a successful recovery. The attorneys at McEldrew Young Purtell have a proven track record of success in all types of whistleblower cases. If you have evidence of a fraudulent scheme involving a health care provider or facility, or any other type of fraud against the government, the attorneys at McEldrew Young Purtell will provide a free confidential review of your evidence and recommend the best course of action. For a no obligation consultation, call Eric L. Young or Paul Shehadi at (215) 367-5151 or you can submit your information through the contact form found on most pages of this site.

Tuomey Doesn’t Justify Stark Law Revisions

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hospital building

I spent some time yesterday reviewing the testimony before the Senate Finance Committee a few weeks ago by health care providers and other organizations regarding the need for revisions to the Stark Law.

Health Care Whistleblower Lawsuits Bring in Another $375 Million for Government

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This has been quite a week for settlement announcements in the world of the False Claims Act. In the past two days, the Department of Justice has announced an additional $375 million in settlements initiated by whistleblower lawsuits. This follows the earlier Novartis announcement that it would pay $390 million to resolve.

Novartis Reports $390 Million Settlement in Kickback Case

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Novartis has reportedly agreed in principle with the Department of Justice to settle a whistleblower lawsuit brought under the False Claims Act for $390 million. The complaint filed by the DOJ in 2014 alleges that the company paid kickbacks to specialty pharmacies for prescriptions involving Myfortic and Exjade. The whistleblower filed the complaint informing the Justice Department of the potential fraud in early 2012 following the company’s $420 million settlement with the government in 2010.

Unnecessary Drug Testing & Kickbacks Cost Millennium Health $256 Million

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One of the nation’s largest urine drug testing laboratories settled a False Claims Act lawsuit today to resolve allegations that it billed Medicare and Medicaid fraudulently for unnecessary services and referrals influenced by kickbacks. In the settlement, Millennium Health (formerly Millennium Laboratories) agreed to pay $256 million. It appears that the company is going to enter Chapter 11 bankruptcy and shareholders are going to make an initial payment of $50 million toward the settlement.

The company agreed to pay $227 million to resolve allegations under the False Claims Act. The FCA is the government’s leading tool against fighting spending as a result of fraud. It provides for treble damages and has been used in the past few years to recover billions of dollars lost to health care fraud. It rewards whistleblowers with payments of between 15 and 30 percent of the amount recovered by the US Government.

Millennium was accused of misrepresenting the need for expensive testing to doctors by encouraging them to setup custom profiles which in fact became standing orders for additional testing that occurred without regard to individual patient need. Medicare prohibits the billing of services which are not reasonable and medically necessary.

Millenium also offered gifts (test specimen cups) to physicians to boost their testing referrals, according to the U.S. Government. I haven’t looked at the procedural history of the case in the context of the False Claims Act, but the specimen cup issue may have been brought to light by an antitrust lawsuit originally filed by one of its competitors. The Department of Justice weighed in on that case after the start of its investigation to say that the free testing cups were a violation of the Stark Law and Anti-Kickback Statute.

Ten million of the settlement amount covered a separate whistleblower lawsuit brought by a healthcare provider in Florida which reported the company for unnecessary genetic testing performed without regard to patient need.

The San Diego-based company has been under investigation since 2012. The settlement is another example of the Justice Departments ongoing pursuit of diagnostic testing companies. Earlier this year, another laboratory (Health Diagnostics Laboratory) settled allegations that it paid physicians improperly for the referral of blood sample testing. Health Diagnostics claimed that the payments were a reasonable amount for the work performed by the doctor.

An article in the Wall Street Journal in 2014 discussed the explosion of annual Medicare payments for high tech testing of urine for drugs. In 2007, less than $50 million was spent on such tests. In 2013, Medicare spent more than $600 million on the monitoring of patient treatment for pain and substance abuse. With the tremendous explosion of payments in this area, it is no surprise that the U.S. Government is looking into improper payments in this area aggressively.

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Doctor to Receive $18.1 Million for Reporting Illegal Contract Offer by Hospital

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Another hospital has settled allegations of violations of the Stark Law that were brought by a whistleblower lawsuit under the False Claims Act. This time, it was Tuomey Healthcare System, which had previously lost at trial, resulting in an order to pay $277 million for violations of the law, and in its Fourth Circuit appeal. It ultimately settled the case for $72.5 million from the South Carolina hospital system, which will be sold to Palmetto Health.

In this case, the hospital entered into contractual relationships with area specialty physicians after becoming concerned that it would lose referrals of surgical procedures from them. The part-time employment agreements required them to send their cases to Tuomey and paid bonuses based in part on their referrals. The Stark Law prohibits the payment of anything of value to physicians based on their referrals of business paid for by the federal healthcare programs. One of the individuals that Tuomey offered a contract to reported them to the Department of Justice.

Many people have the mistaken impression that only an individual who works for a company can bring a whistleblower lawsuit. This is not true. Any individual that has nonpublic information sufficient to demonstrate fraud can file a lawsuit. However, insiders are typically the most likely individuals to have such information so they have gotten. Job seekers, industry experts, consultants, competitors and other individuals can also report health care fraud to the U.S. Government.

The resolution to this case came after a long legal battle, with two trials in a U.S. District Court and two appeals. The first verdict led to an order of payment of $45 million for Stark Law violations but was overturned on appeal. The second jury found Tuomey liable for additional misconduct under the False Claims Act. Tuomey began exploring a sale of the company while facing the largest potential penalty levied against a community hospital. The board and management determined a sale was its best option due to financial difficulties. Based on the discounted recovery, it seems likely that the Justice Department took these into account when reducing the fine against the community hospital.

In September, there were two other hospital settlements of cases under the False Claims Act for kickbacks in violation of the Stark Law. These two settlements totaled almost $200 million in recoveries for the United States Government.

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Record Stark Law Settlement Under False Claims Act

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Two hospital systems have recently settled allegations by whistleblowers under the False Claims Act that they improperly rewarded physician referrals under the Stark Law, with one believed to be the largest settlement of its kind. Broward Health will pay $69.5 million in a settlement announced last week and Adventist Health will pay $118.7 million in an unrelated case with multiple whistleblowers.

The Stark Law prevents hospitals from paying doctors for referrals of Medicare patients. By restricting the financial incentives for treatment of patients insured by government health care programs, the law helps fight unnecessary overbilling.

There have been a number of large settlements in the past year of similar cases involving its corollary, the Anti-Kickback Statute (“AKS”). The AKS applies more broadly, as it covers the payment of referrals to individuals other than doctors. A few of these cases have contained allegations of both kickbacks to physicians and others, implicating both laws.

There is also an ongoing case against Tuomey Healthcare System involving the Stark Law which received a verdict against the hospital of $237 million. Over the summer, Tuomey lost their appeal to the Fourth Circuit. A news article at the time indicated that the hospital was considering its legal options and involved in settlement discussions with the U.S. Government.

Broward Health was accused of paying cardiologists more than $1 million using medical director jobs which were largely a sham designed to boost their compensation

The allegations against Adventist weren’t immediately clear from the press release. Lat year, Adventist indicated it self-reported violations of the Stark Law to the Department of Justice.

Both the Stark Law and the AKS place certain permitted conduct within a safe harbor or exclusion to only target the types of conduct that Congress and regulators have found objectionable. If the conduct violates one or both laws, they also implicate the False Claims Act, which will reward whistleblowers with 15 to 30 percent of the recovery for reporting information to the U.S. Government.

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Medtronic Shelling out the Big Bucks

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Medical device manufacturer Medtronic has voluntarily disclosed that it paid almost $16 million in royalties and consulting fees in the first quarter of 2010.  Of this amount, the vast majority–$14.2 million–went to orthopaedic specialists or surgeons, with $13.9 million of that in the form of royalties for surgical inventions. More than 200 doctors were the beneficiaries of Medtronic’s largess, including 13 in Medtronic’s squeaky-clean home state of Minnesota. One orthopaedic surgeon in Tenessee received almost $4 million in royalties!

Investigators with Senate Finance Committee under  Senator Chuck Grassley have been investigating Medtronic’s relationship with several orthopaedic surgeons for years. In 2006, Medtronic agreed to pay the government $40 million to settle allegations that the company paid kickbacks to surgeons to get them to buy Medtronic products. The DOJ described Medtronic’s relationships with doctors as “sham consulting agreements, sham royalty agreements and lavish trips to desirable locations” which the company offered to doctors between 1998 to 2003.

Medtronic makes big money off of the products it allegedly pays doctors to endorse. For example, Medtronic made $815 million in 2007 alone off of Infuse, a spinal product, which was the subject of a whistleblower lawsuit. With such enormous profits at stake, it is not surprising that device manufacturers like Medtronic pay fees to doctors and sponsor junkets.

Once again, all of this goes back to the ever-increasing role drug and medical device companies play in our lives. Health care is such a big business (emphasis on business) that the major players like Medtronic will keep shelling out what seems like big bucks for serious ROI. As more Americans become insured under the new health care bill and a whole new market opens for drugs and devices, the pecuniary carrot will be all the more enticing to these companies.

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.

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