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December 18, 2015

Maryland-based splint supplier Dynasplint Systems Inc., and its founder and president, George Hepburn, agreed to pay roughly $10.3 million to resolve allegations they violated the False Claims Act by improperly billing Medicare for splints provided to patients in skilled nursing facilities.  According to the government, to circumvent Medicare rules which provide for bundled payment to these facilities that cover all of a patient’s needs, Hepburn and Dynasplint mispresented that patients were in their homes or other places that were not skilled nursing facilities.  The allegations first arose in a whistleblower lawsuit filed by former Dynasplint sales executive Meredith Deane under the qui tam provisions of the False Claims Act.  Ms. Deane will receive a whistleblower award of roughly $2 million from the proceeds of the government’s recovery.  DOJ

December 18, 2015

Iowa Hospice, LLC agreed to pay roughly $1.1 million to settle charges it violated the False Claims Act by submitting false bills to Medicare for hospice services. The Medicare hospice benefit is only available to patients who elect palliative care for a terminal illness and who have a life expectancy of six months or less.  The government alleged that Iowa Hospice knowingly submitted false claims to the government for payment of these services for patients that did not have such a medical prognosis.  DOJ (N.D. OH)

December 16, 2015

Qualitest Pharmaceuticals, the company’s corporate shell, Vintage Pharmaceuticals, its parent Endo Pharmaceuticals, and seven of their affiliates, agreed to pay $39 million to 48 states and the federal government to settle charges they violated federal and state False Claims Acts by selling understrength chewable fluoride tablets.  As part of the settlement, Qualitest admitted the drug labeling for its chewable fluoride tablets represented fluoride amounts in line with guidelines of the American Dental Association and the American Academy of Pediatrics when in reality it used less than half of these represented amounts.  The allegations were first raised in a whistleblower lawsuit brought Dr. Stephan Porter under the qui tam provisions of the False Claims Act.  He will receive a whistleblower award of roughly $4.71 million from the proceeds of the government’s recovery.  Whistleblower Insider, NY, NH

December 9, 2015

Louisiana-based Bollinger Shipyards agreed to pay $8.5 million and release the government from contract claims to settle False Claims Act charges it misrepresented the longitudinal strength of patrol boats it delivered to the Coast Guard that resulted in the boats buckling and failing once they were put into service.  Bollinger was the subcontractor that performed design and conversion work on the Coast Guard’s existing fleet of 110-foot patrol boats.  According to the government, Bollinger provided the Coast Guard with engineering calculations that falsely represented the longitudinal strength of the boats and was two times greater than their actual longitudinal strength. The government further alleged Bollinger failed to follow the quality control procedures that were mandated by the contract that would have ensured against such engineering miscalculations.  DOJ

December 2, 2015

Franklin American Mortgage Company agreed to pay $70 million to resolve allegations it violated the False Claims Act by knowingly originating and underwriting mortgage loans insured by the Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) that did not meet applicable requirements.  Specifically, First American audits identified substantial percentages of seriously deficient loans but the company reported very few deficiencies to HUD, causing the FHA to insure hundreds of loans that were not eligible and, as a result, the FHA suffered substantial losses when it later paid insurance claims on those loans.  DOJ

December 1, 2015

Wisconsin-based Pharmasan Labs, Inc., its related billing company NeuroScience, Inc. and their founders, Gottfried and Mieke Kellermann, agreed to pay $8.5 million to resolve charges they violated the False Claims Act by (i) submitting false information for laboratory services, and (ii) violating Medicare rules for services referred by non-physician practitioners.  According to the government, and as admitted by Pharmasan under the settlement, Pharmasan falsely billed Medicare for ineligible food sensitivity testing; knew Medicare prohibited payment for such testing; and submitted false information to Medicare to disguise the type of test it was performing so Medicare would cover it.  Pharmasan also admitted violating Medicare billing rules which bar payment for lab services referred by non-physicians.  The government investigation leading to the settlement originated from a whistleblower action filed under the qui tam provisions of the False Claims Act.  The whistleblower will receive a whistleblower award of roughly $1.1 million from the government’s recovery.  Whistleblower Insider

December 1, 2015

DRS Technical Services, Inc. agreed to pay $1 million to settle charges it violated the False Claims Act by overcharging on three U.S. Army contracts for work in Kuwait, where 15 DRS TSI employees were directed to record more time for labor hours than was actually being worked.  DRS TSI made a voluntary disclosure to the government under the Contractor Business Ethics Compliance Program and Disclosure Rule (also known as the Federal Acquisition Regulations Mandatory Disclosure Rule) after the company discovered the improper conduct through its internal compliance program.  DOJ (EDVA)

November 30, 2015

Piedmont Pathology Associates, Inc. and Piedmont Pathology, P.C., a North Carolina-based diagnostic anatomic pathology group agreed to pay $500,000 to settle allegations it violated the False Claims Act and Anti-Kickback Statute by engaging in improper financial relationships with referring physicians.  The allegations first arose in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by a former contract salesperson for the practice who witnessed a program where the practice would provide Electronic Medical Record software licenses to various physicians’ practices in exchange for referrals.  The whistleblower will receive a whistleblower award of $75,000 out of the proceeds of the government’s recovery.  DOJ(NC)

November 30, 2015

Texas-based Regent Management Services L.P. agreed to pay roughly $3.2 million to settle charges it violated the False Claims Act and Anti-Kickback Statute by receiving kickbacks from various ambulance companies in exchange for rights to Regent’s more lucrative Medicare and Medicaid transport referrals.  The settlement is believed to be the first to hold accountable medical institutions (hospitals and skilled nursing facilities) rather than ambulance companies for these kind of ambulance “swapping” arrangements.  DOJ (SDTX)

November 25, 2015

The US settled for more than $30 million allegations against several Florida compound pharmacies and their owners for violating the False Claims Act by fraudulently billing TRICARE, the military’s healthcare program.  The settling defendants and their respective settlements include: MedMatch Pharmacy (agreeing to pay more than $4.7 million to resolve concerns that it paid kickbacks to marketers, that it filled prescriptions it knew or should have known were not legitimate, and that it sent prescriptions to states in which it did not have a valid license); OHM Pharmacy (agreeing to pay $4.1 million to resolve allegations of filling prescriptions from a doctor who was writing them outside the ordinary course of practice); WELL Health Pharmacy and its owner (agreeing to pay more than $3 million, as well as 50% of its net profits for five years, for filling prescriptions written by referral sources that had a financial interest in the prescriptions); Topical Specialists (agreeing to pay more than $2.2 million for submitting prescriptions that were tainted by so-called “research fees,” which was an elaborate guise for paying physicians to write prescriptions); Durbin Pharmacy (agreeing to pay $2.1 million, plus 50% of its net profits for five years, for submitting prescriptions that were tainted by kickbacks); and North Beaches Pharmacy (agreeing to pay $10,000, plus 50% of its net profits for five years, for filling compound prescriptions that the government contends were tainted by illegal kickbacks).  DOJ (MDFL)
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