Anti-Kickback and Stark

December 23, 2015

Aria Health Systems, Inc. agreed to pay more than $3 million to settle two False Claims Act matters which Aria self-disclosed.  Aria agreed to pay $564,700 to resolve claims that a cardiologist performed unnecessary invasive procedures at their Torresdale Campus between October 2012 and April 2013.  Aria also agreed to pay $2.5 million to resolve claims of compensation to physicians that were in excess of fair market value and in violation of the Stark Act. DOJ (EDPA)

December 22, 2015

Coloplast Corp., a manufacturer of ostomy and continence care products, and Liberator Medical Supply, Inc., a medical products supplier, agreed to pay $3,160,000 and $500,000, respectively, to resolve allegations that Coloplast paid unlawful kickbacks to several medical suppliers, including Liberator, to induce them to conduct promotional campaigns designed to refer individual users to Coloplast products.  In addition to Liberator, the government alleged Coloplast also paid kickbacks to Byram Healthcare Centers, Inc.; CCS Medical, Inc.; Liberty Medical, Inc.; and Handi Medical, Inc. in return for marketing promotions and conversion campaigns.  The government alleged that in the case of Byram, Liberty, and Handi, Coloplast’s promotional campaigns allegedly included kickbacks in the form of funding for cash incentives – sometimes known as “spiffs” – paid to the suppliers’ sales personnel to induce them to refer patients to Coloplast products.  In other instances, Coloplast allegedly gave rebates or price concessions as inducements for the promotional campaigns.  The allegations first arose in a whistleblower lawsuit filed by two former employees and one current employee of Coloplast under the qui tam provisions of the False Claims Act.  They will receive a yet-to-be-determined whistleblower award from the proceeds of the government’s recovery. DOJ (DMA)

December 22, 2015

A physician’s assistant was sentenced to prison, and a doctor admitted taking bribes in connection with a long-running test referral scheme operated by New Jersey-based Biodiagnostic Laboratory Services LLC, its president and numerous associates.  Leonard Marchetta was sentenced to 42 months in prison and Bret Ostrager pleaded guilty to conspiracy to violate the Anti-Kickback Statute and the Federal Travel Act by accepting bribes.  They are two of the 39 people – 26 of them doctors – who have pleaded guilty in connection with the bribery scheme, which have involved millions of dollars in bribes and resulted in more than $100 million in payments to BLS from Medicare and various private insurance companies.  It is believed to be the largest number of medical professionals ever prosecuted in a bribery case.  The investigation has to date recovered more than $12 million through forfeiture. DOJ (DNJ)

December 16, 2015

Amer Ehsan, the owner and operator of Detroit-area home health care agency Advance Home Health Care Services Inc., was sentenced to 80 months in prison for conspiring with physicians, physical therapists and patient recruiters to bill Medicare for unnecessary home health care and therapy services and paying kickbacks to physicians for referrals.  Ehsan also admitted that he owned and controlled Michigan Rehab and Management Services LLC, which he used to sell information about Medicare beneficiaries and corresponding fictitious patient files to other Detroit-area home health care agencies.  DOJ

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)

November 24, 2015

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.  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.  The most recent targets of the government’s investigation, all of whom have agreed to plead guilty, include: former Pacific Hospital CFO James L. Canedo; orthopedic surgeons Philip Sobol and Mitchell Cohen; chiropractor Alan Ivar; and health care marketer Paul Richard Randall, previously affiliated with Pacific Hospital and Tri-City Regional Medical Center in Hawaiian Gardens.  Under the terms of their plea agreements, Sobol faces a federal prison term of up to 10 years; Canedo, Ivar and Randall face up to five years in prison; and Cohen faces up to three years in prison.  All of them will be required to pay restitution to the victims of the scheme, which in Canedo’s case will be at least $20 million.  Whistleblower Insider

November 20, 2015

Novartis Pharmaceuticals Corp. agreed to pay $390 million to resolve charges it gave kickbacks to specialty pharmacies in return for recommending two of its drugs, Exjade and Myfortic.  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.  The allegations leading to the settlement were first brought to the attention of federal law enforcement by David Kester, who filed a whistleblower lawsuit under the qui tam provisions of the False Claims Act.  He will receive a yet-to-be disclosed whistleblower award from the government’s recovery.  Whistleblower Insider

November 18, 2015

Joe Ann Murthil, the office manager of New Orleans-based home health company Memorial Home Health Inc., was sentenced to 48 months in prison and to pay roughly $14 million in restitution for her role in a Medicare fraud scheme in which she assisted with the payment of illegal kickbacks to patient recruiters and submitted claims to Medicare falsely stating that patients were homebound and had received services.  DOJ