Friday Enforcement Wrap: $260 Million to Settle Kickback Claims & More Top Headlines

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Headlines that Matter for Companies and Executives in Regulated Industries

DOJ News

$260 Million to Settle Kickback Claims

Health Management Associates, Inc. paid more than $260 million and entered into a three year Non-Prosecution Agreement to settle claims relating to eight whistleblower cases. HMA allegedly induced physicians to ignore medical necessity to increase the number of emergency department patient admissions. Read the DOJ press release here.

Pharmacy Engages in $7.9 million Fraud Scheme

Superdrugs pharmacy owner was indicted for allegedly receiving $7.9 million in reimbursements from Medicare and Medicaid for prescription drugs that were never dispensed, prescribed, or not medically necessary. Aleah Mohammed, 33 of Queens, New York, allegedly used the proceeds of the scheme to purchase luxury items including a Porsche and jewelry. The Eastern District of New York’s Medicare Fraud Strike Force led the investigation. Read the DOJ press release is here.

Ophthalmologist Pays $6.9 million to Resolve FCA Lawsuit

A New York ophthalmologist settled a False Claims Act case for $6.9 million. The government alleged that the ophthalmologist administered drugs purchased overseas at a low cost that were not evaluated or approved by the FDA for use in the United States. The ophthalmologist allegedly used the drugs to treat patients who had wet, age-related macular degeneration or other diseases and conditions of the eye. The investigation was led by Assistant U.S. Attorney Kenneth M. Abell of the Eastern District of New York. Read the DOJ press release here.

Litigation Developments

Fite v. Aperian Laboratory Solutions LLC et al.

East Alabama Medical Center agreed to pay $4.25 million to settle allegations that it paid kickbacks in exchange for toxicology lab test referrals. Although the US Attorney’s Office for the Northern District of Alabama declined to intervene in the case, the whistleblower, a former laboratory assistant at EAMC, chose to litigate his claims. The provider-defendants deny the allegations and resolved the lawsuit to avoid the cost of litigation. The case is Fite v. Aperian Laboratory Solutions LLC et al, case number 5:13-cv-01626, in the US District Court for the Northern District of Alabama.

United States of America ex rel. Susan Class, et al. v. Bayada Home Health Care, Inc.

A federal judge has allowed FCA claims against a home health care group providing services to 22,000 patients in 25 states to proceed. The United States District Court for the Eastern District of Pennsylvania held that a separation agreement with a former employee containing a general release of “any and all claims” did not bar a whistleblower’s case accusing the company of violating the FCA by providing home health services to patients who were not homebound. Judge Mitchell Goldberg held that although other jurisdictions found similar language sufficient to incorporate FCA claims, public policy did not favor enforcement of the release because the government lacked sufficient knowledge of the relator’s allegations prior to the execution of the agreement. See United States of America ex rel. Susan Class, et al. v. Bayada Home Health Care, Inc., No. CV 16-680, 2018 WL 4566157, (E.D. Pa. Sept. 24, 2018).

Pippins v. AbbVie Inc. et al.

Shareholders filed a securities fraud class action against AbbVie after California regulators accused the manufacturer of engaging in a $1.3 billion kickback scheme. While the regulators’ complaint accuses AbbVie of violating the Insurance Frauds Prevention Act, the class action alleges that AbbVie deliberately misled investors to inflate stock prices. The case is Pippins v. AbbVie Inc. et al., case number 2:18-cv-08225 and is pending in the U.S. District Court for the Central District of California.

United States v. Esformes, et al.

Florida businessman Philip Esformes, accused of operating a health care fraud scheme across a network of 30 nursing homes, is seeking for a second time to disqualify the prosecution in his case. Despite finding evidence of a “pattern of prosecutorial misconduct,” the magistrate judge issued a recommendation denying the defendant’s request. Esformes objected to the recommendation, arguing that the remedies proposed, including suppression of evidence, was not enough to address the government’s three year campaign of “false denials under oath” and repeated disregard of attorney-client and work product privileges. The case is United States v. Esformes, et al., case number 1:16-cr-20549, in the U.S. District Court for the Southern District of Florida.

Other News

Assembly Bill No. 2789

The Governor of California signed into law a bill which requires health care practitioners to issue all pharmaceutical prescriptions electronically by January 1, 2022. The new law aims at preventing prescription fraud. Nine other states already have similar laws, and another 16 states have pending laws. The text of the bill is available here.


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