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Catch of the Week — PA Hospital and Health System Pays $12.5 Million to Settle FCA Allegations

Posted  12/14/18
Coordinated Health Holding Company, LLC, a for-profit hospital and health system, and its founder, owner, and CEO, Emil DiIorio, M.D., have agreed to pay a combined $12.5 million to settle allegations of violating the False Claims Act for submitting false claims to Medicare and other federal health care programs for orthopedic surgeries. Coordinated Health is a for-profit hospital and health system based in the Lehigh Valley region of Pennsylvania. It...

December 11, 2018

A New York-based audiology practice has agreed to pay $566,263.08 in connection with alleged violations of the False Claims Act and Anti-Kickback Statute. According to an unnamed whistleblower, Oviatt Hearing and Balance, LLC improperly billed Medicare and TRICARE for services rendered by unlicensed and unsupervised employees, as well as provided inappropriate inducements in the form of free iPads, Butterball turkeys, and gift cards, to Medicare and TRICARE beneficiaries to get them to choose Oviatt over other providers. For their role in exposing the fraud, the whistleblower stands to receive a relator's share of $120,000. USAO NDNY

December 11, 2018

Coordinated Health Holding Company, LLC, a for-profit hospital and health system, and its founder, owner, and CEO, Emil DiIorio, M.D., have agreed to pay a combined $12.5 million to settle allegations of violating the False Claims Act in claims submitted to Medicare, Medicaid, and federal employee health insurers. From 2007 until 2014, under DiIorio's direction, Coordinated Health allegedly exploited a billing code called Modifier 59 in order to separately bill for orthopedic surgery charges that, properly billed, instead fall under a single "global" payment for each surgery. Even after outside consultants warned company executives about the improper practice in 2011 and 2013 and provided on-site training on the proper use of Modifier 59, Coordinated Health continued making false claims, causing federal healthcare payers to overpay by millions of dollars. As part of the settlement, the company has signed a Corporate Integrity Agreement for additional government oversight into its billing practices over the next five years. USAO EDPA

December 4, 2018

Dermatology Associates of Central New York, PLLC has agreed to pay $811,196.88 to settle claims that it overcharged Medicaid, Medicare, and TRICARE by falsely submitting claims under physicians' names, in violation of both the federal and New York False Claims Acts. A whistleblower complaint revealed that many of the physicians named on invoices were not in the office the day care was provided and could not have supervised in the rendering of services, and that some of the non-physician practitioners who provided care were not licensed to do so in the state of New York. As a result of bringing the fraud to light, the unnamed whistleblower will receive $138,000. USAO NDNY

November 16, 2018

A New Jersey-based doctor, Dr. Bernard Ogon, has been charged with participating in a compound pharmacy fraud that caused over $20 million in losses to health care benefit programs, including $3 million in losses to TRICARE. In exchange for a per-prescription payment, Ogon allegedly signed prescriptions that were pre-filled by telemedicine companies on behalf of patients he never saw. On multiple occasions, the prescriptions were for pain and scar creams that were not medically necessary, and were in fact exorbitantly expensive when made by a compound pharmacy. Ogon was also accused of writing prescriptions for patients in states that he was not licensed to practice in; if convicted, he faces a maximum of 10 years in prison. USAO NJ

November 1, 2018

The CEO and COO of Smart Lab LLC have been sentenced to a cumulative 10 years in prison for defrauding TRICARE of millions of dollars. CEO H. Hamilton Wayne and COO Justin Morgan Wayne allegedly paid kickbacks to substance abuse treatment centers in exchange for using Smart Lab for expensive confirmatory urinalysis testing. In some cases, treatment center patients were required to submit three medically unnecessary samples a week, but exempt from paying co-payments, co-insurance, or deductibles that should've been mandatory. Altogether, they have been ordered to pay restitution amounting to $2,897,389.50. Separately, H. Wayne has been ordered to pay $104,344, and J. Wayne has been ordered to pay $20,000. A third defendant, Smart Lab sales representative Lanny Fried, remains to be sentenced later this month. USAO SDFL

October 22, 2018

A Kentucky-based medical equipment supplier has agreed to pay $5,254,912 to settle claims based on the False Claims Act that it defrauded many government insurers, including Kentucky Medicaid, Medicare, and CHAMPVA (under the Department of Veterans Affairs), by submitting fraudulent claims relating to certain compounded creams that it produced. According to the DOJ press release, in order to be properly reimbursed, Cooley Medical Equipment, Inc. was required to obtain prior authorization from Kentucky Medicaid and CHAMPVA before using certain powdered ingredients. Instead, Cooley claimed to use cream-based versions of the same ingredients, then submitted thousands of false claims to the insurers, and received millions of dollars in reimbursements. The company eventually came clean and self-disclosed to the US Attorney's Office, allowing it to pay a fine of 1.5 times instead of the usual 3 times loss suffered by the government. USAO EDKY

October 18, 2018

Four individuals have pleaded guilty to conspiring to violate the Anti-Kickback Statute for a scheme that made payments to patient recruiters and a medical office assistant to find TRICARE beneficiaries to get prescriptions for compounded prescription pain cream, scar cream, and supplements from a doctor who had never seen the patients.  In less than one year, the scheme generated over $10 million in compound prescriptions for over 100 TRICARE beneficiaries.  E.D. Ark.

October 18, 2018

Dr. Felmor Agatep, a Florida-based doctor, has plead guilty to receiving kickbacks and defrauding TRICARE over prescriptions to outrageously expensive and medically unnecessary pain and scar creams. According to the DOJ press release, a one month supply of the creams in question cost more than $16,000 when made by a compounding pharmacy. At some point in late 2014, Agatep agreed to receive kickbacks from a marketing group of $100 per TRICARE patient in exchange for writing prescriptions for these creams. In just a month and a half, Agatep allegedly wrote a total of 265 prescriptions, which amounted to a bill of $4.4 million for TRICARE. He now faces a maximum penalty of 10 years in prison. USAO MDFL

September 28, 2018

RS Compounding, Inc, and its owner, Renier Gobea, have agreed to pay $1.2 million to settle a False Claims Act-based lawsuit by whistleblower McKenzie Stepe that the now defunct compounding pharmacy had overcharged TRICARE, at times by as much as 10,000% more than it charged members of the general public. The alleged fraud occurred between 2012 and 2014. According to the DOJ, TRICARE's costs for compounded drugs have ballooned from $5 million to over $500 million in the span of ten years, then increased by over 150% between 2014 and 2015 alone. Tragically, the whistleblower passed away before the settlement was finalized, so her estate will receive her relator's share of $264,000. DOJ
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