Government Wins $43 Million Verdict in False Claims Act Case

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Government Wins $43 Million Verdict in False Claims Act Case

On February 28, 2023, a federal jury in Minnesota handed down a $43 million verdict in a whistleblower suit against an ophthalmology distributor. The verdict potentially opens the door to $485 million in False Claims Act (FCA) liability and related statutory penalties.

As background, the case centered on an alleged kickback conspiracy in which prosecutors accused a Minnesota-based ophthalmology distributor of showering surgeons with luxury travel, sports tickets, as well as other forms of kickbacks to induce the doctors to use their eye surgery products. Specifically, as alleged in the government’s intervenor complaint, between 2006 and 2015, Cameron-Ehlen Group Inc., which does business as Precision Lens, and company owner Paul Ehlen paid kickbacks to doctors to induce them to use eye surgery products supplied by the company and its corporate partner, Sightpath Medical Inc. These kickbacks included luxury skiing vacations, fishing trips, golfing and hunting outings, private jet travel, discounted frequent flyer miles, and lavish meals. The purpose of these kickbacks was to induce doctors to use Precision Lens’ products in cataract-related surgeries and other Medicare-covered procedures.

The US Department of Justice (DOJ) has indicated that it will seek treble damages and statutory penalties for each false claim.

Law360’s coverage of the case can be found here.

Pittsburgh Physician and Medical Center to Pay $8.5 Million to Settle FCA Case

On February 27, 2023, the University of Pittsburgh Medical Center (UPMC) and one of its surgeons, Dr. James L. Luketich, agreed to pay the federal government $8.5 million to resolve allegations that Dr. Luketich violated Medicare and Medicaid rules by scheduling himself for multiple simultaneous surgeries.

The case was originally filed in 2019 as a whistleblower action by another surgeon who had worked alongside Dr. Luketich previously. The government intervened in late July 2021 and filed its intervenor complaint shortly thereafter in September. As alleged, Dr. Luketich scheduled multiple surgeries at the same time, going back and forth between them. The practice violated federal rules, which require surgeons to be present or immediately available for all critical parts of an operation. The complaint further alleged that not only did UPMC know about the simultaneous surgeries, but in fact had warned Dr. Luketich about the practice but did not stop him.

The settlement resolves these allegations, though UPMC did not admit to liability as part of the settlement. Additionally, a separate provision of the settlement involves a “corrective action plan,” under which Dr. Luketich must submit to a yearlong third-party audit of his Medicare billing. This provision of the settlement is in line with other recent settlements that focused on individual accountability and go-forward corrective actions, including at least one case in which executive compensation was tied to the effective implementation of a compliance program.

Law360’s coverage of the case can be found here.

Medical Centers Agree to Pay Over $21 Million Dollars to Settle False Claims Allegations

On February 22, 2023, two medical centers – Cornerstone Healthcare Group Holding Inc. (Cornerstone) and CHG Hospital Medical Center LLC. dba Cornerstone Hospital Medical Center (CHG) – agreed to pay the United States $21.6 million to resolve claims that they improperly billed Medicare for services rendered between 2012 and 2018.

As background, Cornerstone provided extended medical and rehabilitative care to individuals who qualified as clinically complex and possessed multiple acute or chronic conditions. The complaint, which was originally filed as a sealed qui tam lawsuit in September 2018, contained three principal allegations. First, the complaint alleged that on numerous occasions, unlicensed students of Cornerstone physicians performed medical procedures, which were subsequently submitted to Medicare for reimbursement. Second, the complaint alleged that Cornerstone submitted claims for services ostensibly rendered by physicians who were not actually in the country at the time the services were performed. Finally, the complaint alleged that Cornerstone billed for services that were actually not supported by the patients’ diagnosis or medical records, or else billed for services that were either not rendered or were so inadequate they were essentially worthless (in some cases, even resulting in harm to patients).

The settlement, which is one of the largest civil healthcare fraud settlements in Houston, resolves each of these allegations.

The DOJ’s press release can be found here.

Twenty-Three People Indicted in $61.5 Million Medicare Fraud Scheme

Recently unsealed court documents have charged 23 Michigan residents with two schemes to defraud Medicare of more than $61.5 million. Specifically, prosecutors allege that the defendants paid kickbacks and billed Medicare for unnecessary services that were never actually provided.

The scheme involved unnecessary home health services performed by several home health agencies owned and operated by the defendants in the Detroit metropolitan area. Specifically, prosecutors allege that the defendants concealed their ownership interest in these home health agencies by listing family members and other associates as the owners. Subsequently, the defendants paid bribes to other co-conspirators to recruit patients who did not need home health care, did not qualify for home health care under Medicare, and frequently were not actually provided the care for which Medicare was billed. To facilitate the scheme, the defendants also allegedly entered into quid pro quo arrangements with physicians and clinics to learn how to fraudulently bill Medicare.

As a result of the scheme, patients were subjected to needless services and drug testing, all of which cost Medicare over $65 million.

The DOJ’s press release can be found here.

Department of Justice and New York Attorney General Settle $7 Million FCA Case

On February 27, 2023, the DOJ and the New York State Attorney General have reached a $7 million settlement in an FCA case involving false claims submitted by an upstate nursing home. As alleged by the government, the operators of the nursing facility in question – the now-defunct Saratoga Center for Rehabilitation and Skilled Nursing Care in Ballston, NY – understaffed the nursing home, resulting in medication errors, avoidable injuries including resident falls and pressure ulcers. The government also alleged that the facility did not consistently maintain hot water in the facility, maintain an adequate linen inventory, or dispose of solid waste. At bottom, the government contended, each claim for reimbursement submitted for these “worthless” services constituted a false claim under the FCA.

In addition to the monetary portions of the settlement, the US Department of Health and Human Services, Office of Inspector General (HHS OIG) also negotiated voluntary exclusions of some of the individuals involved in the scheme from Medicare, Medicaid, and all other Federal health care programs for various terms.

The DOJ’s press release can be found here.


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