Government Enforcement Actions

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

June 2, 2016

Aquatic Sensor Network Technology (Aquasent)and several of its officials and employees, namely Dr. Jun-Hong Cui, Dr. Yong Ma, Dr. Shengli Zhou, Dr. Zhijie Shi, and Juanjuan Liao, agreed to pay $400,000 to resolve allegations they violated the False Claims Act in the management of federally-funded grants awarded to Aquasent by the National Science Foundation.  DOJ (DCT)

June 1, 2016

Florence Bikundi and her husband Michael D. Bikundi Sr., owners of home care agency Global Healthcare Inc., were sentenced to prison for 10 years and 7 years, respectively, for health care fraud, money laundering, and other charges stemming from a scheme in which they and others defrauded the District of Columbia Medicaid program of over $80 million.  They were also ordered to forfeit over $11 million seized from 76 bank accounts; their $1 million residence; $73,000 in cash seized from their residence and five luxury vehicles.  The court also imposed a forfeiture money judgment of roughly $40 million and ordered them to pay roughly $80 million in restitution to D.C. Medicaid.  The government’s evidence showed the Bikundis led a scheme to bill Medicaid for services that were not fully provided, recruiting others, including family members, into the scam and creating fraudulent paperwork to hide the illegal activity.  DOJ

June 1, 2016

Dr. Jonathan Oppenheimer, former owner and CEO of Nashville drug testing laboratory Prost-Data, Inc. (d/b/a OURLab), OPKO Health, Inc., and OPKO Lab, have agreed to pay $9.35 million to resolve charges they violated the False Claims Act by providing illegal kickbacks in exchange for business.  According to the government, Dr. Oppenheimer and OURLab made donations toward electronic health records (EHR) systems purchased by their client physician practices that fell outside the restrictions set forth in the Anti-Kickback Statute EHR safe harbor and the Stark EHR exception.  The allegations originated in a whistleblower lawsuit filed by a former OURLab employee under the qui tam provisions of the False Claims Act.  The whistleblower will receive a whistleblower award of $1.683 million from the proceeds of the government's recovery.  DOJ (MDTE)

June 1, 2016

San-Diego-based Harper Construction Company, Inc. paid $5.4 million to resolve allegations it violated the False Claims Act by fraudulently billing the government for work on multiple projects on military bases through the use of sham small disadvantaged businesses.  The settlement involves four government contracts to construct facilities at Camp Pendleton and Camp Lejeune.  According to the government, Harper claimed it met the contract requirement that it subcontract a certain percentage of work to small disadvantaged businesses when in fact it subcontracted with sham small disadvantaged businesses.  Also, Harper allegedly required the sham small businesses to pass through all of their work to an affiliated large business, Frazier Masonry Corporation.  The allegations originated in a whistleblower lawsuit filed by Rickey Howard, a former employee of Harper subcontractor Frazier Masonry Corporation, under the qui tam provisions of the False Claims Act.  Mr. Howard will receive a whistleblower award of $1,485,000 from the proceeds of the government's recovery.  DOJ (SDCA)

May 31, 2016

Deloitte Consulting agreed to pay $11.38 million to resolve allegations under the False Claims Act that it submitted false claims under a General Services Administration contract.  In 2000, GSA awarded Deloitte a contract for the provision of information technology services.  According to the government, Deloitte failed to comply with price reduction clauses in the contract which required Deloitte to reduce the prices it charged the government if it offered lower prices to specific commercial customers and which resulted in the government paying more for Deloitte’s services than comparable commercial customers.  DOJ

May 31, 2016

Newark, New Jersey-based Saint Michael’s Medical Center Inc. agreed to pay $450,000 to resolve allegations it violated the False Claims Act by falsely billing Medicare and Medicaid for medically unnecessary cardiac procedures.  The allegations originated in a whistleblower lawsuit under the qui tam provisions of the False Claims Act.  DOJ (DNJ)

May 27, 2016

Medical device manufacturer Paradigm Spine agreed to pay $585,000 to resolve allegations it violated the False Claims Act by marketing the company’s coflex-F® device for surgical uses that were not approved by the FDA.  The settlement further resolves allegations that Paradigm caused false claims by giving false recommendations on how to code health claims for procedures involving the company’s coflex® device.  The allegations originated in a whistleblower lawsuit filed by Chris Coyle, a former Paradigm Spine sales representative, under the qui tam provisions of the False Claims Act.  Mr. Coyle will receive a whistleblower award of approximately $105,300 from the proceeds of the government's recovery.  DOJ (DMD)

May 27, 2016

Carlos Rodriguez Nerey, the owner and president of Miami-area consulting and staffing company Nerey Professional Services Inc., was sentenced to 60 months in prison (and ordered to pay roughly $2.4 million in restitution) for his role in a $2.3 million Medicare fraud scheme.  According to evidence presented at trial, Nerey was involved in a conspiracy to accept kickbacks in return for referring Medicare beneficiaries to Mercy Home Care Inc. and D&D&D Home Health Care Inc. to serve as patients, including those who did not qualify for home health care services.  DOJ

June 8, 2016

New Jersey announced that a Burlington County medical device distributor was charged with stealing more than $100,000 in insurance payments intended for two companies that made and marketed a device to clear patients’ airways. Loetta Karen Edwards, 46, owner of Edwards Medical DME, LLC, (Edwards Medical) in Cinnaminson, was indicted on one count of second-degree theft by failure to make required disposition of property received. Edwards was a local distributor of the “Frequencer,” a Canadian-made medical device that helps clear airways in patients with cystic fibrosis and chronic obstructive pulmonary disease. According to prosecutors, Edwards would order the devices on behalf of individuals who paid for them through their insurance companies. Prosecutors say Edwards would then process the insurance claims for the devices and receive the payments. She would then remit a portion of the money to the device manufacturer, Dymedso, Inc., and a portion to Dymedso’s Ohio-based sales representative, Clinical Technology. NJ