Whistleblower Rewards

December 18, 2015

Thirty-two hospitals in 15 states agreed to pay more than $28 million to settle charges they violated the False Claims Act by submitting false claims to Medicare for minimally-invasive kyphoplasty procedures used to treat certain spinal fractures often arising from osteoporosis.  According to the government, the settling hospitals billed Medicare for these procedures on a more costly inpatient basis when they should have been billed on a less costly outpatient basis.  The government has now reached settlements with more than 130 hospitals totaling approximately $105 million to resolve allegations of overcharging Medicare for kyphoplasty procedures.  The 15 current settling hospitals include: The Cleveland Clinic (Ohio); Citrus Memorial Health System (Florida); Cullman Regional Medical Center (Alabama); Martin Memorial Medical Center (Florida); MultiCare Tacoma General Hospital (Washington); Norwalk Hospital (Connecticut); Princeton Community Hospital Association (West Virginia); Sacred Heart Medical Center (Washington); Sarasota Memorial Hospital (Florida); Spartanburg Regional Health Services District Inc. (South Carolina); St. Cloud Hospital (Minnesota); Tampa General Hospital (Florida); 5 hospitals affiliated with Community Health Systems Inc. (Tennessee); 5 hospitals affiliated with Tenet Health Care Corporation (Texas); 5 hospitals formerly owned and operated by Health Management Associates (Florida); 3 hospitals affiliated with BayCare Health System (Florida); and 2 hospitals affiliated with Banner Health (Arizona).  In addition, the government previously settled with Medtronic Spine LLC, the corporate successor to Kyphon Inc., for $75 million to settle allegations the company caused false claims to be submitted to Medicare by counseling hospital providers to perform kyphoplasty procedures as inpatient rather than outpatient procedures.  All but 3 of the current settlements originated in a whistleblower lawsuit filed by Craig Patrick, a former Kyphon reimbursement manager, and Charles Bates, a former Kyphon sales manager for Kyphon.  They will receive a whistleblower award of roughly $4.75 million from the proceeds of the government’s recovery.  DOJ

EMC - Procurement Fraud/Education ($95.5 million)

A Constantine Cannon attorney represented two whistleblowers in a False Claims Act case alleging Education Management Corporation violated the recruiter incentive compensation ban, enrolling students regardless of whether they were suitable candidates.  In November 2015, the company agreed to pay $95.5 million to settle the action, the largest False Claims Act settlement to date involving the Department of Education.  The two whistleblowers (along with several others) received a whistleblower award of $11.3 million.  Read more -- Business Insider, DOJ, PR Newswire, CC.

October 21, 2015

United Parcel Service has agreed to pay $4 million to resolve allegations that the company violated the false claims acts of 14 states, New York City, Washington D.C., and Chicago.  Under contracts at issue between UPS and the government, UPS guaranteed delivery of packages by certain specified times the following day. The investigation began after a UPS employee filed a federal whistleblower lawsuit in Virginia alleging that a practice of falsifying package arrival times and logging in phony reasons for late arrivals went on company-wide. The UPS employee alleged that, in some cases, bogus exception codes excusing late deliveries were entered into the tracking system before UPS drivers had even arrived at locations where cumbersome security procedures and other delays had purportedly occurred. The state settlement follows an earlier $25 million settlement with the federal government.  NJ; NY

August 24, 2015

The New York Attorney General announced settlement agreements with five defendants in a False Claims Act case that will return more than $8 million to the Medicaid and Medicare programs. The agreements resolve claims that SpecialCare Hospital Management Corporation defrauded Medicaid and Medicare by illegally referring patients to unlicensed drug and alcohol treatment programs in exchange for kickbacks. Investigation of the defendants began after whistleblowers Mathew I. Gelfand, M.D. and Enrico Montaperto filed complaints under New York’s False Claims Act. NY