The False Claims Act

Chapter

Health Care Fraud

Anyone who discovers questionable Medicare and Medicaid fraudulent practices can file a confidential legal claim under the False Claims Act. –Author

Introduction

W

hite collar crime and public corruption have a direct impact on the American taxpayer; it is a myth that such crimes are victimless. The United States is struggling to create a health care system that meets the public’s ever changing needs at a reasonable cost. In this chapter, we illustrate the magnitude of health care fraud and how it impacts the taxpayer and eldercare. You are encouraged to report suspected cases. Reading these cases, you will notice how well individuals are rewarded when they stand up against outlandish creed.

Department of Justice

According to the U.S. Department of Justice (DOJ), in fiscal years 2011 and 2012, they won or negotiated over $4.2 billion in health care fraud judgments and settlements. The funds were returned to health care programs and used to pay rewards to private individuals who assisted in identifying and prosecuting fraud cases. The Health Insurance Portability and Accountability Act of 1996 created a national Health Care Fraud and Abuse Control system. Since its start, it has return over $23 billion to the Medicare Trust Funds. During 2012 fiscal year, DOJ filed criminal charges in 452 cases involving 892 defendants. A total of 826 defendants were convicted of health care fraud and related crimes. In that same year, the Federal Bureau of Investigation (FBI) health care fraud investigations disrupted 329 criminal fraud organizations, and dismantled the criminal hierarchy of more than 83 criminal enterprises. The evening news is sprinkled with such cases. The problems of fraud continue and keep health care cost high.

Kickback Cases
A Department of Justice lawsuit against Omnicare, Inc. alleged that it accepted kickbacks from drug manufacturers as an incentive to promote an anti-epileptic drug in nursing homes. (Omnicare, Inc. was purchased by CVS Health Corporation, August 2015) The complaint against Omnicare, Inc. stated that they solicited and received millions of dollars from the pharmaceutical manufacturer Abbott Laboratories and others. This is such an important case because Omnicare was the nation’s largest provider of pharmaceuticals and pharmacy consulting services to nursing homes. Omnicare and companies like them are designated as protectors of nursing home residents. Their role is to make sure patients are getting only required medications. Abbott gave Omnicare kickbacks for purchasing and recommending the prescription drug Depakote used to control behavioral disturbances exhibited by dementia patients. According to the lawsuit, Omnicare’s pharmacists reviewed nursing home patients’ charts at least monthly and made recommendations to physicians on what drugs should be prescribed. To secure kickbacks from pharmaceutical companies, the DOJ alleged that Omnicare touted its influence over physicians in nursing homes.
Those suffering from dementia are among the most vulnerable patients. There has to be honest and independent judgment on their behalf. Kickback shams compromise the health of nursing home residents. To hide the kickbacks, Abbott made payments to Omnicare described as “grants” and “educational funding”. Omnicare solicited contributions from Abbott and other pharmaceutical manufacturers via its “Review” program. They referred to this program as its “one extra script per patient” program. The program entitled Omnicare to increasing levels of rebates from Abbott based on the number of nursing homes residents serviced and the amount of Depakote prescribed per resident. The lawsuit alleges that Abbott funded Omnicare management meetings on Amelia Island, Florida, offered tickets to sporting events, and made payments to local Omnicare pharmacies. Omnicare, Abbott Labs, and others like them raid the coffers of Medicare, Medicaid and other health care programs. Criminal behavior such as this places nursing home residents at risk and allows treatment decisions to be influenced by financial incentives. Court records reported that Omnicare paid $124 million dollars to settle. As of 2014, Omnicare’s value was in the neighborhood of 8 billion dollars. They have a history of legal problems but continue to be paid for Medicare and Medicaid pharmaceutical and hospice services. This and other related cases point out the need to know who you are doing business with when selecting a nursing home or hospice care.
In May 2012, the DOJ, individual states, and Abbott entered into a negotiated $1.5 billion global civil and criminal resolution.

It resolved Abbott’s civil liability under the False Claims Act for paying kickbacks to nursing home pharmacies.

Using the False Claims Act, the DOJ consolidated whistleblower lawsuits and filed its complaint against Omnicare. Whistleblower provisions of the False Claims Act allow private parties to sue for fraud on behalf of the United States and share in any recovery. The Ohio pharmacists that instigated the lawsuit received close to $17 million. Doctors who received the kickbacks were allowed to continue practicing medicine.

These cases are captioned United States ex rel. Spetter v. Abbott Labs., et al., Case No. 10-cv-00006 (W.D. Va.) and United States ex rel. McCoyd v. Abbott Labs., et al., Case No. 07-cv-00081 (W.D. Va.). The claims asserted in the government’s complaint are only allegations and there has been no determination of

liability.
Daiichi Sankyo Co. Ltd. Case
According to a January 9, 2015 DOJ news release, the Japanese pharmaceutical firm Daiichi Sankyo Co. Ltd. will pay $39 million to the United States government and state Medicaid agencies to resolve allegations it violated the False Claims Act by paying kickbacks to induce physicians to prescribe Daiichi drugs, including Azor, Benicar, Tribenzor and Welchol. One of Daiichi Sankyo’s former sales representatives launched the case. This person will receive $6.1 million of the federal recovery. These schemes cheat Medicare and Medicaid out of millions of dollars and threaten the lives of many elderly and disabled citizens. The case is captioned U.S. ex rel. Fragoules v. Daiichi Sankyo, Inc., Civil Action No. 10-10420 (D. Mass.).
Tracking White Collar Crime
In 2015, a former Arkansas judge pleaded guilty to reducing a jury verdict against a nursing home. The Arkansas Supreme Court removed him from the bench. He was accused of taking a $50,000 campaign donation from an unnamed business. Two days later, he reduced a $5.2 million jury award in a negligence lawsuit to $1 million. A donation was given in July 2013. According to the Arkansas Democrat-Gazette, the company involved was the Greenbrier Nursing and Rehabilitation Center. The lawsuit involved the death of a resident, the paper said. Owners of the nursing home denied any wrongdoing.
Community Health Systems Professional Services Corporation and three affiliated hospitals agreed to pay $75 million to settle allegations they violated the False Claims Act. The hospitals allegedly made illegal donations to county governments in New Mexico. A former Community Health revenue manager filed a whistleblower complaint under the “qui tam” provisions of the False Claims Act. That person will receive about $18.6 million as their share of the government’s recovery.
In 2014, Rite Aid Corp. agreed to pay $3 million to settle claims it used gift cards to entice Medicare and Medicaid beneficiaries to transfer their prescriptions to its pharmacies. The Rite Aid whistleblower was awarded $500,000.
Reporting Fraud
Anyone who discovers questionable Medicare and Medicaid fraudulent practices can file a confidential legal claim under the False Claims Act.

Becoming a “whistleblower” in what is legally known as a “qui tam” lawsuit, a private individual may collect up to 30 percent of the amount recovered, depending on how the case is prosecuted. “Qui tam” is an abbreviated Latin phrase “qui tam pro domino rege quam pro se ipso in hac parte sequitur,” which means “Who sues on behalf of the King as well as for himself.” You may report potential instances of waste, fraud, or abuse related to HHS’s programs on their hotline Website. The department will appoint a Whistleblower Ombudsman. At this site you can review individual state false claims acts. Click this link and view the department’s most wanted health care fraud

fugitives.