Archive

July 8, 2016

California announced that the Bureau of Children’s Justice and False Claims Unit of the California Department of Justice has reached a settlement agreement with K12 Inc., a for-profit online charter school operator, and the 14 affiliated non-profit schools known as the California Virtual Academies (“CAVA Schools”) that it manages, over alleged violations of California’s false claims, false advertising and unfair competition laws. As part of the settlement, which is subject to court approval, K12 will provide approximately $160 million in debt relief to the non-profit schools it manages—“balanced budget credits” that were accrued by the schools as a result of the fee structure K12 used in its contracts—and will pay $8.5 million in settlement of all claims. In addition, K12 has agreed to implement significant reforms of its contracts with the CAVA Schools, undergo independent reviews of its services for students with disabilities, ensure accuracy of all advertisements, and provide teachers with sufficient information and training to prevent improper claiming of attendance dollars. CA

July 7, 2016

A Bedford-based transportation service provider has agreed to pay more than $700,000 to resolve allegations that it submitted false claims to the state’s Medicaid program (MassHealth) for medically unnecessary wheelchair van rides, Massachusetts announced. It also allegedly submitted claims for services that should have been provided at a lower cost through a MassHealth transportation broker. The AG’s investigation revealed that REM Transportation Services, LLC (REM) submitted the false claims from January 5, 2010 to December 31, 2014. Many of the MassHealth members allegedly receiving the rides were ambulatory and did not use wheelchairs or need assistance, as required under MassHealth regulations. MA

June 27, 2016

Massachusetts announced that a Chicopee-based mechanical contractor has agreed to pay more than $220,000 to resolve allegations it falsely certified compliance with equal opportunity requirements on two public contracts. The assurance of discontinuance alleges B-G Mechanical Contractors, Inc. (B-G) violated the state’s consumer protection laws and False Claims Act by failing to abide by provisions in two public design-build energy contracts requiring B-G to subcontract a certain percentage of work to Minority/Women Business Enterprises (M/WBEs). For both contracts, the AG’s Office alleges B-G improperly claimed full M/WBE credit for supplies subcontractors sold to and then repurchased from M/WBEs in sham transactions. MA

June 9, 2016

Raleigh, North Carolina-based specialty pharmacy Salix Pharmaceuticals, Inc., which sells products used to treat various gastroenterology conditions, agreed to pay $54 million to settle charges it violated the federal Anti-Kickback Statute and False Claims Act by using its “speaker programs” as a mechanism to pay kickbacks to doctors to induce them to prescribe Salix drugs and medical devices.  Specifically, the government alleged Salix held sham speaker programs, frequently at high-end restaurants, where doctors were paid substantial honoraria purportedly to educate other doctors about a Salix product, but in reality spent little or no time discussing the product.  $16,578,000 of the settlement amount will go to the Medicaid programs of different states including Ohio.  The allegations originated in two whistleblower lawsuits filed under the qui tam provisions of the False Claims Act.  The whistleblowers will receive a yet-to-be-determined award from the proceeds of the government's recovery.  DOJ (SDNY), OH

June 6, 2016

Genentech Inc. and OSI Pharmaceuticals LLC agreed to pay $67 million to resolve charges they violated federal and state False Claims Act by making misleading statements about the effectiveness of the cancer drug Tarceva.  According to the government, Genentech and OSI made misleading representations to physicians and other health care providers about the effectiveness of Tarceva when there was little evidence to show that Tarceva was effective to treat those patients unless they also (i) had never smoked or (ii) had a mutation in their epidermal growth factor receptor, which is a protein involved in the growth and spread of cancer cells.  The allegations originated in a whistleblower lawsuit filed by former Genentech employee Brian Shields under the qui tam provisions of the False Claims Act.  He will receive a whistleblower award of approximately $10 million out of the proceeds of the government’s recovery.  Whistleblower Insider GA, MA, OH

May 26, 2016

New York announced that it has entered into a settlement agreement with Vascuscript, Inc., d/b/a Mobile Pharmacy Solutions, to resolve allegations that it billed Medicaid for prescriptions which were written by an excluded Medicaid Provider. The Attorney General’s investigation determined that from April 21, 2010, through January 25, 2013, Vascuscript, Inc. submitted and received payment on approximately 4,600 claims to Medicaid for prescriptions that were written by Dr. Mikhail Strutsovskiy. The Department of Health had previously excluded Dr. Strutsovskiy from the Medicaid program, rendering prescriptions written by him ineligible for Medicaid reimbursement. Before filling a prescription, pharmacies are required under Medicaid billing rules to first ascertain whether the prescriber’s services are eligible for reimbursement. Because Vascuscript did not do so, it filled and delivered the prescriptions written by Dr. Strutsovskiy that were not eligible for Medicaid reimbursement. NY

April 27, 2016

Michigan and 34 other states reached an agreement in principle to settle allegations against Wyeth, a subsidiary of Pfizer, Inc. The settlement will resolve allegations that Wyeth knowingly underpaid rebates owed under the Medicaid Drug Rebate Program for the sales, Protonix Oral and Protonix IV between 2001 and 2006. Both are drugs that are used to treat conditions such as acid reflux. Under the settlement Wyeth agreed to pay $784.6 million to the United States and the States. Over $371 million of this amount will go to the Medicaid Program. The settlement stems from two whistleblower lawsuits which were filed in the United States District Court for the District of Massachusetts. The United States, 35 states (including Michigan) and the District of Columbia intervened in the lawsuits. NY, NJ, MI, WA

March 9, 2016

Florida arrested a couple for defrauding the Medicaid program out of more than $180,000 in fraudulent claims. Oscar Alzate, 48, and Alba Garcia, 48, owners of Digital Radiology Center, Inc. and Medisound, Inc., allegedly operated a clinic without the appropriate licensure or proper oversight by a physician as required by Florida law. The investigation revealed that Alzate and his partner Garcia, neither who are physicians, billed the Medicaid program for services never rendered. The clinic owners also allegedly forged physicians’ signatures on medical reports and provided defective mammography services. FL

March 8, 2016

A Connecticut psychiatrist will pay $404,798 to settle a civil False Claims Act lawsuit alleging that she submitted false claims for payments to Connecticut’s Medicaid program. The state alleged that, from March 2010 to September 2013, while operating a private practice in Mansfield, Dr. Panoor submitted upcoded claims indicating that she provided Medicaid patients with both group counseling and either individual psychotherapy or a detailed examination on the same dates of service when, in fact, she did not provide psychotherapy or detailed examination sessions but instead provided medication management services or a brief meeting with the patient for the purpose of monitoring or changing a patient’s drug prescription – services that are coded, and thus reimbursed, at lower payment rates.

March 7, 2016

A Colorado-based telecommunications and Internet service provider company, Level 3 Communications, has agreed to pay more than $8 million to resolve allegations it improperly withheld rental payments to the Massachusetts Department of Transportation (“MassDOT”) under an agreement that allows it to run fiber optic cables alongside state highways. The settlement agreement resolves allegations that Level 3 Communications breached its contract with MassDOT and violated the Massachusetts False Claims Act by concealing the amount it owed the state agency and knowingly avoiding its annual rent obligations. MA