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As States Look to Expand Health Coverage, State FCAs Become More Important than Ever

Posted  03/22/23
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The increasing burden of healthcare costs has state governments looking at new programs to expand government healthcare options for their residents.  Such an expansion of government spending will require a corresponding expansion of efforts to root out fraud, waste, and abuse that steals taxpayer dollars and reduces the benefits available.  Existing anti-fraud measures, including state False Claims Acts, will play a...

March 20, 2023

Acute care hospital Luminis Health Doctors Community Medical Center, Inc. (“DCMC”) and radiology imaging practice Diagnostic Imaging Associates, LLC (“DIA”) have agreed to pay $2 million to resolve allegations of defrauding federal healthcare programs.  Because DCMC’s outpatient cancer screening facility was not enrolled in Medicare and Medicaid and was thus not eligible for reimbursements, it entered into a written agreement with DIA whereby DIA would bill the programs for services performed by DIA as well as DCMC’s outpatient cancer screening facility, in violation of program rules and the False Claims Act.  The alleged misconduct occurred between 2010 and 2020.  USAO MD

March 17, 2023

A man in New York who laundered millions of dollars of criminal proceeds from a panoply of illegal schemes—including computer hacking, healthcare fraud, loan fraud involving Small Business Administration (SBA) funds, and operating an unlicensed international money transmitting business—has been sentenced to 10 years in prison.  According to the DOJ, Djonibek Rahmankulov worked with computer hackers to gain control of U.S. bank accounts, then executed millions of dollars of fraudulent wire transfers into accounts controlled by him and his associates.  He also worked with pharmacies to launder millions of dollars of Medicare and Medicaid reimbursements for HIV medications that were not actually dispensed or legally obtained.  During the pandemic, Rahmankulov submitted fraudulent applications to the SBA for his companies, laundered the proceeds, and made false statements to financial institutions regarding his activities.  Finally during his trial, he repeatedly sought to obstruct justice by threatening a witness and producing fraudulent letters of support from the community.  USAO SDNY

March 3, 2023

Florida-based Lakeland Regional Medical Center (“LRMC”) has agreed to pay $4 million to resolve False Claims allegations of making improper non-bona fide donations to Florida’s Polk County in order to free up funds and increase the center’s reimbursements from Medicaid.  The donations involved paying off some of the county’s financial obligations to other healthcare providers, so the reimbursements that LRMC received were effectively funded by their own donations.  DOJ

February 27, 2023

Several individuals and entities involved with the Saratoga Center for Rehabilitation and Skilled Nursing Care have agreed to pay over $7.1 million to resolve allegations of violating the False Claims Act by submitting claims for essentially worthless services.  From 2017 until the center closed in 2021, while receiving reimbursements from New York’s Medicaid program, the center’s owners and operators failed to provide adequate staffing, hot water, and clean linens, and failed to dispose of solid waste.  As a result of these failures, conditions fell below regulatory standards, and residents suffered from unnecessary errors and neglect.  NY AG; DOJ

February 8, 2023

Centene Corporation has agreed to pay $215 million to resolve allegations of violating the California False Claims Act.  A government investigation revealed that for almost two years, Centene failed to disclose or pass on discounted prescription drug costs to the state’s Medicaid program, as mandated by program rules, and instead falsely reported higher costs incurred by two of its managed care plans, which together serve beneficiaries in over 20 counties.  CA AG

February 7, 2023

A startup that operates as an online pharmacy for birth control and contraceptives has agreed to pay $15 million to settle whistleblower claims of defrauding California’s Medicaid program of millions of dollars.  In violation of the state False Claims Act, The Pill Club allegedly billed for ineligible services, services not rendered, and enormous quantities of expensive products not ordered by customers.  Investigators found that even in cases where customers asked to stop receiving those products, the company continued to dispense enormous quantities and bill the government for them.  CA AG

February 2, 2023

Central California medical provider Clinica Sierra Vista (CSV) has agreed to pay nearly $26 million to settle claims of violating the state False Claims Act.  Following an internal investigation, the company’s new management voluntarily disclosed to the government that former executives knowingly submitted false information on financial reports in order to receive higher payments from the state’s Medicaid program.  CA AG

January 30, 2023

A doctor in Michigan who was involved in a $250 million fraud scheme against Medicare, Medicaid, and other insurers, has been sentenced to 16.5 years in prison.  Along with 21 co-conspirators, Dr. Francisco Patino took advantage of patients suffering from addiction by forcing them to receive medically unnecessary, painful, but lucrative spinal injections in exchange for opioid prescriptions.  Additionally, Patino knowingly violated the Anti-Kickback and Stark laws by receiving kickbacks from a laboratory in exchange for sending patient samples to that lab.  All told, Patino submitted more claims to Medicare for spinal injections than any other provider in the country between 2012 and 2017, prescribed more Oxycodone than any other provider in Michigan in 2016 and 2017, and was personally responsible for $120 million of the $250 million in false claims billed to insurers.  DOJ

January 27, 2023

Walgreen Co. has paid $7 million to settle a False Claims Act lawsuit by the United States and State of Tennessee that alleged the company submitted claims to Tennessee’s Medicaid program for specialty medications that didn’t meet the program’s criteria for coverage.  According to the governments’ 2021 complaint, one of Walgreens’ former pharmacists falsified prior authorization requests and records for 65 Medicaid beneficiaries who didn’t meet program requirements.  The company then billed TennCare under those false prior authorization requests, and later failed to make repayments even after it discovered its employee’s misconduct.  USAO EDTN
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