Healthcare Fraud

October 18, 2023

The president of a California-based medical technology company has been sentenced to 8 years in prison and ordered to pay $24 million in restitution in the first COVID-related criminal securities fraud case charged by DOJ and the first COVID-related criminal healthcare fraud case brought to trial.  Among many things, Mark Schena of Arrayit Corporation was found to have taken advantage of the pandemic by claiming he and his company had developed a technology to test for just about any disease, including COVID, using a single drop of blood.  In doing so, Schena and Arrayit lied to investors to give them a false sense of credibility, paid illegal kickbacks to marketers to run deceptive plans about the accuracy of its tests, and submitted false claims to Medicare and private insurers for medically unnecessary allergy testing.  DOJ

October 10, 2023

Mobile cardiac PET scan provider Cardiac Imaging Inc. (CII), and its founder and owner Sam Kancherlapalli, have agreed to pay over $75 million and over $10 million, respectively, to resolve a qui tam case by former billing manager Lynda Pinto, which alleged the company, Kancherlapalli, and part-owner Richard Nassenstein defrauded Medicare.  In violation of the Anti-Kickback Statute, Stark Law, and False Claims Act, CII and Kancherlapalli allegedly paid kickbacks to referring cardiologists in the form of fees, ostensibly for supervising PET scans, that were far above fair market value.  The alleged misconduct occurred over a ten year period.  DOJ

October 2, 2023

BioTek reMEDys Inc. and its CEO, Chaitanya Gadde, have agreed to pay $20 million to resolve allegations of providing illegal kickbacks to patients and physicians, in violation of the False Claims Act and Anti-Kickback Statute.  Former employees Shantae Wyatt and Latoya Sparrow alleged in a qui tam suit that the specialty pharmacy induced patients to purchase drugs by routinely waiving mandatory copays, and induced physicians to make referrals by providing dinners, gifts, and free administrative or clinical support services.  One physician in particular who received kickbacks, Dr. David Tabby, has paid $480,000 to resolve allegations against him.  Wyatt and Sparrow will receive over $4 million from the settlement with BioTek and Gadde, and over $91,000 from the settlement with Tabby.  DOJ

October 2, 2023

Genomic Health, Inc. (GHI), a wholly-owned subsidiary of Exact Sciences Corporation that provides clinical diagnostic tests, has agreed to pay $32.5 million to resolve two separate qui tam suits alleging violations of the False Claims Act and Anti-Kickback Statute in connection with lab tests for cancer patients.  GHI allegedly evaded Medicare’s 14-Day Rule—which prohibits labs from separately billing for the same covered tests within 14 days of a patient’s discharge from a hospital—by canceling and reordering tests so they fell within appropriate time frames, seeking reimbursement directly from Medicare, and writing off unpaid lab fees owed by hospitals.  As a result of this settlement, the whistleblowers in the case will receive over $5.5 million.  DOJ

September 30, 2023

The Cigna Group has agreed to pay over $172 million and enter into a five-year Corporate Integrity Agreement in order to resolve allegations of violating the False Claims Act.  According to qui tam suit by a former part-owner of a Cigna vendor, Robert Cutler—who will receive an $8.1 million share of the settlement—the healthcare company knowingly submitted inaccurate and untruthful diagnosis codes on behalf of Medicare Advantage Plan beneficiaries in order to inflate their reimbursements from Medicare.  DOJ