This week’s Department of Justice “Catch of the Week” goes to the doctors and other healthcare professionals caught up this week in the government’s “Operation Spinal Cap” dragnet. In a series of related cases the DOJ announced yesterday, the former CFO of Long Beach, California-based Pacific Hospital, two orthopedic surgeons and two others have been charged in long-running health care fraud schemes that illegally referred thousands of patients for spinal surgeries and generated nearly $600 million in fraudulent billings over an eight-year period. The wide-ranging kickback scheme, which involved dozens of surgeons, orthopedic specialists, chiropractors, marketers and other medical professionals, involved improper referrals to Pacific Hospital and Hawaiian Hospital. See DOJ Press Release.
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— “Injured workers were treated like livestock by doctors and hospitals who paid or accepted kickbacks and bribes in exchange for referrals.”
California Insurance Commissioner Dave Jones commenting on the recent round of criminal charges in the Justice Department’s ongoing fight against fraud in the spinal surgery industry, code-named “Operation Spinal Cap.”
Whistleblower alleges U.S. officials are placing child immigrants in homes with dangerous criminals – Senators Chuck Grassley and John Cornyn are seeking details on a whistleblower’s complaint that immigration officials are putting children in the homes of people convicted of child molestation, sex trafficking, homicide, and domestic violence. Grassley Website
Feds take down $600 million health care fraud conspiracy – The Justice Department has secured two guilty pleas and says three more are on the way regarding a kickback scheme for spinal surgery patients in Southern California. DOJ
Takata employees reported problems with air-bags years ago – But the company covered-up the problems with the safety devices, which have now been involved in several injuries and at least 8 deaths. Wall Street Journal
L-3 Communications settles False Claims Act lawsuit for $25.6 million – The company agreed to the payment to settle charges that it provided the military with faulty holographic weapons sights. Reuters
Solar panel company settles fraud case for $8.5 million – 1 SolTech Inc. was charged with importing fire-prone solar panels from China and falsely labeling them “Made in the USA.” Dallas Morning News
PTC Inc. earmarks $28 million for bribery settlement – The technology firm disclosed the set-aside in a securities filing, indicating a settlement with the government over charges of bribery in China may be reaching a conclusion. Wall Street Journal
— “This merger is a tax-dodging maneuver that enriches shareholders and executives while shortchanging the public and robbing the Treasury of money that would pay for a host of government programs — including education, scientific research and other services that also benefit corporations.”
New York Times editorial on the proposed $160 billion deal between Pfizer and Allergan. Click here for more.
FDA targets inaccurate medical tests — “Inaccurate and unreliable medical tests are prompting abortions, promoting unnecessary surgeries, putting tens of thousands of people on unneeded drugs and raising medical costs, the Food and Drug Administration has concluded.” NYT
Lesson from Case Keenum: NFL must hold teams accountable for concussion protocol violations — “When players break NFL rules designed to promote player safety, they pay fines and face potential suspension. What happens when teams violate, or outright ignore, player safety guidelines? The league will provide an answer soon.” Washington Post
Why whistleblowers are crucial for cycling and other sports — “They have to understand that this is necessary…that whistleblowers are not people who blame the sport, but who help the sport.” Cycling News
The threat within: insider fraud on the rise — “In the past year, a whistleblower was at least partially responsible for exposing 41% of cases of fraud that were uncovered. This is well ahead of the next two most frequent sources of discovery, external audits (31%) or internal audits (25%). Kroll Global Fraud Report
Pfizer’s big breakthrough: global tax avoidance — “The $160 billion deal to combine Pfizer and Allergan, the maker of Botox, does not appear to be illegal. But it should be.” NYT
NYC will pay $150K to settle retaliation lawsuit from whistleblower cop who said police were changing crime stats — NYPD Sergeant Robert Borrelli “is the second police whistleblower in recent weeks to pocket a six-figure payout to settle their federal lawsuits that alleged the NYPD was cooking the Compstat books during then-Police Commissioner Raymond Kelly’s administration.” Daily News
Praise for report showing US failure towards intelligence whistleblowers — Whistleblower Thomas Drake, who in 2010 became the first American charged with espionage in almost 40 years and who was a predecessor of Edward Snowden, applauds a new report by the PEN American Center accusing the government of failing to protect whistleblowers. Truthdig
Are compliance officers being targeted by government regulators? An increased focus on individual accountability is making those professionals feel particularly vulnerable, even as regulators in the United States and abroad emphasize their partnership with compliance officers.
Andrew Ceresney, director of the Security & Exchange Commission Division of Enforcement, addressed the National Society of Compliance Professionals in November 2015 and attempted to offer some reassurance. He stressed that the SEC “is in your corner when your work is hindered by uncooperative or obstructionist business personnel.” Ceresney characterized those instances where the SEC brought actions against compliance officers as falling into three categories: where the compliance officer is involved in misconduct unrelated to their compliance function; has tried to mislead or obstruct Commission staff; or has exhibited a wholesale failure to carry out his or her compliance duties. These followed similar remarks made by Chair Mary Jo White at the Compliance Outreach Program for Broker-Dealers.
The Department of Justice continues its recent streak of False Claims Act wins with its $390 million settlement Friday with Novartis Pharmaceuticals Corp. resolving charges the pharmaceutical giant gave kickbacks to specialty pharmacies in return for recommending two of its drugs, Exjade and Myfortic. Of the $370 million, roughly $287 million will go to the federal government and $83 million to the settling states. The settlement follows the January 2014 and April 2015 settlements of specialty pharmacies Bioscrip, Inc. and Accredo Health Group under which the pharmacies agreed to pay a total of $75 million to resolve False Claims Act charges based on the same allegations. That brings to $465 million the total government recovery from this alleged kickback scheme. See DOJ Press Release.
— “We don’t have a white-collar over-criminalization problem in this country. We have an under-criminalization problem.”
Rena I. Steinzor, Center for Progressive Reform scholar, on proposed legislation to amend federal criminal laws. Click here for more.
Doctor compensation likely to be issue in more FCA suits — Recent settlements by hospitals that overcompensated physicians to induce referrals may be the beginning of a trend. And whistleblowers are driving the Justice Dept.’s enforcement. Modern Healthcare
University of Florida will pay $20 million to settle grant fraud suit — The government alleged that the University misused grants from the Dept. of Health & Human Services by overcharging for employee salaries, charging the government for costs that were not covered by the grants, and inflating the costs of contractor services. DOJ
Would proposed “improvements” to the criminal laws protect white collar fraudsters? — A law professor examines proposed changes to the federal criminal code and sees threats to government prosecutors’ ability to pursue corporate fraud. NYT
Florida hospice settles False Claims Act suit for $3 million — Hospice of Citrus County has settled a suit that alleged it provided unnecessary and undocumented hospice services. Some patients received hospice care for more than 3 years, although Medicare and Medicaid require that patients be terminally ill and expected to live for less than 6 months. DOJ
Whistleblower claims Sanofi destroyed documents — A former paralegal at Sanofi, who has filed a whistleblower suit alleging the company paid kickbacks to doctors and pharmacies, claims that the company’s lawyers destroyed documents rather than turning them over as required in litigation. CNBC
This week’s Department of Justice “Catch of the Week” goes to Education Management Corp. (EDMC), the second-largest for-profit education company in the country. On Monday, the company agreed to pay $95.5 million to resolves allegations it violated the federal False Claims Act and several state False Claims Acts by falsely certifying it was in compliance with Title IV of the Higher Education Act and parallel state statutes. The Pittsburgh-based company operates nationwide and enrolls more than 100,000 students under four post-secondary school brands: the Art Institutes, South University, Argosy University and Brown-Mackie College. See DOJ Press of Release. click here for more