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Spotlight on Nursing Home Fraud

There has been a lot of attention lately to nursing home fraud, which is heavily reimbursed by Medicare.  In January, the  U.S. Attorney’s Office for the District of Massachusetts and the U.S. Department of Justice reached a $125 million Medicare fraud settlement with Kindred/RehabCare, the country’s largest nursing home therapy provider. In February,  the Boston Globe reported on new efforts by the Commonwealth of Massachusetts to regulate nursing home providers, following an investigative series the Globe did last year about “how an out-of-state chain had assembled its string of nursing homes with scant attention from regulators. That company, Synergy Health Centers, has been beset by reports of substandard care — festering pressure sores, medication errors, poor infection control, inadequate training, and short-staffing.”

The DOJ settlement by contract therapy providers RehabCare Group Inc., RehabCare Group East Inc., and their parent, Kindred Healthcare Inc., resolved allegations raised by whistleblowers that the company violated the False Claims Act by knowingly causing skilled nursing facilities (SNFs) to submit false claims to Medicare for rehabilitation therapy services that were not reasonable, necessary and skilled, or that never occurred. RehabCare is the largest provider of therapy in the nation, contracting with more than 1,000 SNFs in forty-four states to provide rehabilitation therapy to their nursing home patients.  In addition to the settlement with Kindred/RehabCare in January, the DOJ also settled claims with four SNFs for their role in submitting false claims to Medicare; those settlements totaled some $8.225 million. Previously, DOJ had reached settlements totaling over $500 million with a number of other SNFs who had contracted with RehabCare and allegedly submitted false claims to Medicare.

The list of allegations against Kindred/RehabCare is breathtaking, even for someone who may have become somewhat jaded or cynical about the depths of health care fraud in this country. Perhaps the most troubling one is “Reporting that skilled therapy had been provided to patients when in fact the patients were asleep or otherwise unable to undergo or benefit from skilled therapy (e.g., when a patient had been transitioned to palliative end-of-life care).” Really?

Meanwhile, the Boston Globe series highlighted a different kind of concerns—substandard quality of care provided to patients, such as festering pressure sores, medication errors, poor infection control, inadequate training, and short-staffing. This too is a form of Medicare fraud—the patients are not getting the services Medicare is paying for. Worse yet, they are being injured. (See also earlier article in Globe exposé.)

Vigilance is needed by all of us to protect the lives and quality of care of our nursing home population as well as to protect our Medicare dollars. We applaud the whistleblowers, the government, and the media for keeping the focus on this industry.

“See Something, Say Something” Applies to Health Care Fraud Fight Too

Since 9/11 we have all become used to the expression “see something, say something” as a way to perform our civic duty and protect our fellow citizens and our country from terrorism. What if we applied this to our country’s fight against health care fraud too? That is what whistleblowers do. They are the ones who see something, and have the courage to say something.  Health care fraud is a problem that is costing the taxpayers billions of dollars in fraud every year and compromising the quality of care patients receive. In short, it hurts us all. Three recent settlements in Florida remind us how important it is for whistleblowers on the front lines of health care to come forward.


One settlement involved Rose Radiology Centers in Tampa, Florida where the types of health care fraud ran the gamut. Among other things, the Centers performed and billed for medically unnecessary tests, paid kickbacks to other doctors to get business, and allowed unauthorized persons, who were not doctors and who were not supervised by doctors, perform which had the potential for life threatening side effects.


The other two settlements involved the national operations of a large cancer provider (21st Century Oncology) and one of its doctors in Naples, Florida. The government alleged they were performing medically unnecessary for fluorescence in situ hybridization, or “FISH,” tests supposedly to diagnose bladder cancer. The government also alleged that the company encouraged the doctors to order such tests  by offering them bonuses that were based in part on the number of tests referred to 21st Century’s laboratory.  See also recent DOJ press release.


While these are not the hundred million dollar or more “blockbuster” cases that garner headlines, they are just as important. The whistleblowers were concerned with what they witnessed and took action. We applaud them for saying something when they saw something.

Health Care Fraud and Abuse Seminar Wraps Up

After 13 lively sessions and a take home exam, the seminar taught by whistleblower attorney Bob Thomas has finished, with nine 3rd year students and one 2nd year student from BU School of Law showing real sophistication in this complex field.


The course, which is part of BU’s Health Law Program, is structured in two parts.  The first covers the main substantive areas of health care fraud enforcement:  The False Claims Act, the Anti-Kickback Act, The Food Drug & Cosmetic Act, Stark, and the Exclusion & Debarment remedies.  The second part of the course is practice-oriented, with the students hearing from prosecutors, defense attorneys, compliance officers, and whistleblowers and their attorneys, in presentations relating to actual cases they were involved in.


Similarly, the take home exam questions are based upon fact patterns that come up in the cases handled or evaluated by the Whistleblower Law Collaborative.  If you think you’re as smart as a law student, take a look at the questions they answered quite masterfully.  Several of the exams submitted were as good or better than any we could imagine an experienced practitioner writing  — a gratifying thing for a “professor” to see, given the multiple demands on the students’ time.


This is the sixth time that Bob Thomas has taught the course.  Given all the changes in the law in this dynamic field, he intends to keep offering the course indefinitely in future years, as long as student interest remains as high as it has been so far.

Novartis Will Pay, But Will Its Execs?

All eyes are on the expected $390 million health care fraud settlement between Novartis and the United States Department of Justice that was announced as a “preliminary accord” yesterday by the company. Will DOJ (and the U.S. Attorney for the Southern District of  New York who is handling the case) make any individual executives pay (with money or jail time) or will the company just pay a lot of money? Earlier this year, DOJ made a big deal of its new policy that individuals will be held accountable in white collar crime cases. Now, inquiring minds want to know if there will be individuals held accountable in this case or will it be business as usual?


With very few exceptions, in health care cases, executives have gotten off scot-free, keeping their bonuses, stock options, and other hefty compensation earned on the backs of the illegal conduct for which the company is paying. As Novartis  noted yesterday, this is a preliminary accord. We know that Novartis is a repeat offender, having paid over $420 million in a civil and criminal settlement in 2010, and entered into a Corporate Integrity Agreement. So, what will the U.S. Attorney for the Southern District of  New York and DOJ do?  (See our earlier blog related to this subject.)


Making individuals pay is not just punishment for the past, it is deterrence for the future. Read the company’s announcement yesterday and you can see that the seeds of future illegal behavior are already sown–not only by Novartis but other drug manufacturers with whom they are competing for market share on their respective drugs. Sending a strong message now to individuals may go a long way to offsetting the immediate economic incentive these individuals have to push the envelope.  In the process, we will all pay less for our health care and for government programs like Medicare and Medicaid.

Evercare Hospice, Inc. Must Answer Fraud Charges

Last week a federal judge in Colorado ruled that a case brought against United HealthCare entities Evercare Hospice, Inc., Ovations, Inc. and OptumHealth Holdings, LLC, may continue. This is another in a string of hospice fraud cases the government and/or relators are pursuing or have settled. In denying the defendants’ motions to dismiss the fraud claims, the court rejected two arguments often made by defendants in False Claims Act health care fraud cases.


First, the court found that maintaining adequate patient records to support the need for hospice care is material to the government’s decision to pay a claims and thus is a condition of payment for hospice care claims under Medicare (at 15-18).  The defense had argued that this requirement was merely a “condition of participation” in the Medicare program (that could lead to being excluded from the program, but not a condition of payment (that could lead to a claim for payment being false under the FCA). After examining the relevant Medicare statutory and regulatory language, the court rejected this argument.


This issue is a hot one in FCA health care fraud cases.


While it would seem to make no sense that a provider could be excluded from Medicare (and thus not allowed to bill), but is somehow entitled to be paid, this is a trap some courts have fallen into by focusing solely on the language of the statute and regulations, not on the purpose of the requirement. We suggest the proper construct for evaluating this issue is the one articulated by the United States Court of Appeals for the First Circuit last spring when it reversed the district court’s opinion in United States ex rel. Escobar v. Universal Health Services, Inc.,  No. 14-1423 (1st Cir. March 17, 2015) This construct puts the focus on the purpose of the requirement, i.e., is it “material” in that it may influence the government’s decision to pay the claim.


Second, the court held that a physician’s certification of Medicare eligibility for the service being billed can be false within the meaning of the FCA even if it is an expression of opinion, scientific judgment or a statement or conclusion about which reasonable minds could differ (at 19-22). The corporate defendant who submitted the claims argued that the physician certification shielded it from liability. Key to the court’s decision was that


“the government’s complaint contains extensive allegations that suggest that the information on which the physicians relied (which consisted of oral reports from nurses who evaluated the patients) was not reliable and therefore precluded those physicians’ legitimate exercise of clinical judgment.”  (at 20) (emphasis added).


The court cited favorably to another hospice case in which the court found that


“’physicians could not legitimately exercise their medical judgment because defendants provided false information on which the physicians relied.’ United States ex rel. Landis v. Hospice Care of Kansas, LLC, 2010 WL 5067614, at *4 (D. Kan. 2010).” (at 19)


Like the condition of payment issue above, this issue of trying to use doctor certifications as an absolute bar to a company’s FCA liability, is one that is frequently invoked by FCA defendants. We are glad to see yet another court realize that a doctor’s opinion is only as good as the information it is based on.


Now the defendants will have to answer the complaint and the case will proceed to discovery. It will be interesting to see how the litigation progresses and if the case settles. In the meantime, the court has provided a strong opinion that the government and relators can use in other health care fraud cases.

Medical Directorships Face False Claims Act Scrutiny

Just last week, HHS-OIG issued a Fraud Alert warning that “Physicians who enter into compensation arrangements such as medical directorships must ensure that those arrangements reflect fair market value for bona fide services the physicians actually provide.”


Then yesterday, the Department of Justice (DOJ) and HHS-OIG announced a record setting $17 million False Claims Act settlement of a whistleblower case against Hebrew Homes Health Network, Inc. alleging that the company improperly paid doctors ostensibly acting as medical directors for referrals of Medicare patients requiring skilled nursing care. Bona fide Medical Directors perform a valuable function at a hospital or a nursing facility, but the position can also be a cover for doctors to steer their patients to a particular facility. For example, in the Hebrew Homes case:


“From 2006 through 2013, Hebrew Homes allegedly operated a sophisticated kickback scheme in which they hired numerous physicians ostensibly as medical directors pursuant to contracts that specified numerous job duties and hourly requirements.  The various facilities had several such medical directors under contract at any given time, paying each several thousand dollars monthly.  The United States alleged that in reality these were ghost positions, and that most of the medical directors were required to perform few, if any, of their contracted job duties.  Instead, they were allegedly paid for their patient referrals to the Hebrew Homes facilities, which increased exponentially once the medical directors were put on the payroll.”


We have written before about the importance of Anti-Kickback Act and its close cousin the Stark Act, and this recent settlement is a perfect example of the evils each law seeks to prevent or punish.  In a nutshell, the Anti-Kickback Act (42 U.S.C. § 1320a-7b(b)) prohibits the making or offering or paying or accepting “remuneration” (defined as any thing of value) if one purpose of the payment is to induce referrals, while Stark (42 U.S.C.§1395nn) prohibits a hospital (or other entity providing healthcare items or services) from submitting claims to Medicare or Medicaid for items or services rendered to patients referred by physicians who have improper financial relationships with the providers of the items or services.


Each law contains certain “safe harbors” which are in essence exceptions to their blanket prohibitions. A violation of each law can be the basis for a civil (e.g., under the FCA) prosecution by DOJ, civil penalties, or an administrative action by HHS. In addition, the Anti-Kickback Act provides criminal penalties. Both laws are designed to ensure that physicians’ judgment about their patients’ care is conflict free (for example, as to whether an item or service is medically necessary, safe, effective, and of good quality), to keep the competitive playing field for health care providers level and fair, and to protect the financial integrity of government health care programs such as Medicare and Medicaid.


We expect this most recent settlement, coupled with HHS-OIG’s recent Fraud Alert, signals an increase in whistleblower cases and investigative and enforcement actions against hospitals, skilled nursing facilities, and other medical facilities that utilize physicians as medical directors.  However, it remains to be seen if these will focus also on the physicians who act improperly as the HHS-OIG Alert suggests or whether it is only the facilities that will be targeted.


As the saying goes, “It takes two to tango” and without physicians willing to accept kickbacks and break self-referral laws, the facilities could not play the game.  In the most recent announced settlement, only the facility (Hebrew Homes) is paying to settle. While HHS-OIG’s Fraud Alert notes that it has recently reached settlements with 12 individual physicians, these were administrative settlements under the Civil Monetary Penalties Law, not False Claims Act or criminal charges. It remains to be seen what further types of actions the United States takes against the individual physicians.

Florida Home Health Care Kickbacks to Doctors

In the past month, the Justice Department has settled two cases involving kickbacks between doctors and home health care companies providing services to Medicare patients.


Offering and/or accepting kickbacks has been banned by Congress and violates the False Claims Act .


As the Justice Department said in a recent release:


“The Anti-Kickback Statute and the Stark Law are intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives.  The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by federal health care programs, including Medicare.  The Stark Law forbids a home health care provider from billing Medicare for certain services referred by physicians who have a financial relationship with the entity.”


The first case involved two South Florida medical doctors and their wives who allegedly accepted sham marketer salaries in exchange for their husbands’ referrals to A Plus Home Health Care Inc.  Dr. Alan and Lynn Buhler agreed to pay to the United States $1.047 million and Dr. Craig and Cynthia Prokos agreed to pay $90,000 to settle allegations that accepting such kickbacks violated the False Claims Act.


The second case involved Recovery Home Care Inc. and Recovery Home Care Services Inc.  who allegedly paid dozens of physicians thousands of dollars per month to perform patient chart reviews in return for referring their patients to Recovery Home Care. The government contended that these doctors were over-compensated for any actual work they performed and the payments were an illegal inducement.


Recovery Home Care agreed to pay $1.1 million to resolve allegations that the Recovery Home Care entities violated the False Claims Act.  Whistleblower Gregory Simony, a former employee of Recovery Home Care, will receive $198,000 of the recovered funds.  The government continues to litigate this case against Recovery Home Care’s previous owner, Mark Conklin.


As they say, “it takes two to tango” and in health care that often means the “partners” are the doctors and another health care provider. The cases above involved home health care companies, but in other instances improper relationships could involve, for example, hospitals, hospice care,  to name just a couple. Any health care provider who depends on physician referrals is in a position to improperly influence the doctor’s judgment with illegal kickbacks. Medicare patients deserve conflict free medical care, as do the taxpayers.


For more on home health care fraud, see the announcement last year of the largest home health care fraud settlement against Amedisys – United States ex rel. CAF Partners v. Amedisys, et al., Civ. No.:10-cv-02323 (E.D. PA) – in which the Whistleblower Law Collaborative represented one of the relators.

RELATED: Florida Home Health Care Company Agrees to Pay $1.1 Million to Resolve False Claims Act Allegations RELATED: Two Florida Couples Agree to Pay $1.13 Million to Resolve Allegations that They Accepted Kickbacks in Exchange for Home Health Care Referrals

How Reliable is Medical Literature?

Some people are skeptical when I tell them that there’s a problem with the vast database of medical information out there, particularly articles appearing in medical journals and purporting to be based on sound science.  Too often I have seen cases where drug manufacturers have “ghost written” articles for a doctor’s signature, or where authors advocating for a product have omitted important adverse event information, for example.  See article.
It can’t really be that bad, people say.
Don’t take my word for it. 
Check out the latest from the JAMA Internal Medicine, which in its February 10, 2015 issue published a study showing that in sixty different clinical trials it examined, serious violations were found that called into question the accuracy of the information, but the information was published anyway.
The problems were not trivial; they included:
• 22 trials with falsified information.
• 14 trials where researchers failed to report adverse events.
• 42 trials with violations of the trial’s protocols.
• 35 trials with record-keeping errors.
• 30 trials in which researchers failed to protect patient safety or acquire informed consent.
How are doctors supposed to make good clinical decisions when the information they are reviewing is not what it purports to be?
With all the discussion going on about free flow of information, wouldn’t it be nice if we were really talking about the free flow of accurate and reliable information?

Elizabeth Warren Proposes to Make Pharma Pay

Elizabeth Warren, Senator from Massachusetts known for sticking up for consumers in the face of corporate interests, has recently turned her focus on the pharmaceutical industry.  Noting that a substantial number of pharma companies have paid multi-billion dollar settlements, Senator Warren has introduced a bill called the Medical Innovation Act, which would require pharma companies to pay into a medical research fund any time they settle a fraud-related scheme.
Warren notes that companies that have successfully produced blockbuster drugs have often realized these profits on the basis of research initially funded by the federal government.  It’s only fair then, she proposes, that when these manufacturers violate the rules in pursuit of greater profits, they pay into a fund that goes back into the research mechanisms that made them rich in the first instance.
“It’s like a swear jar,” Warren colorfully notes.  “Whenever a huge drug company that is generating enormous profits as a result of federal research investments gets caught breaking the law and wants off the hook, it has to put some money in the jar to help fund the next generation of medical research,” Warren said. “Instead of letting companies that break the law get off with a slap on the wrist, the Medical Innovation Act will make sure that they pay up in a way that really makes a difference. A difference to the health of all Americans, and a difference to all of the company’s competitors who are playing by the rules.”

Medical Device Manufacturer Settles False Claims Act Lawsuit

A whistleblower False Claims Act lawsuit accusing Medtronic, Inc. of promoting off label unapproved uses of its “SubQ” spinal stimulation device has been settled by the Department of Justice for $2.8 million.


The suit, brought by a former Medtronic sales representative, alleged that “from 2007 through 2011, Medtronic knowingly caused dozens of physicians located throughout more than 20 states to submit claims to Medicare and TRICARE for investigational medical procedures known as SubQ stimulation that were not reimbursable.” While the safety and efficacy of SubQ stimulation had not been proved to the FDA, Medtronic nevertheless persuaded doctors to implant Medtronic’s spinal cord stimulation devices just beneath the patient’s skin near an area of pain, most often in the lower back, where the devices would purportedly provide electrical impulses intended to alleviate chronic pain.


Devices or drugs prescribed for purposes that are not FDA approved and thus are “off label” are unfortunately all too common. Indeed, the successful, but unlawful, promotion of prescription drugs for off label purposes has led to multiple large FCA recoveries in the last several years.  On Sunday night John Oliver did a hilarious, sad but true, piece on these drug company tactics on his show Last Week With John Oliver.


Patients should not be treated like guinea pigs for profit. Ask your doctor…or ask John Oliver..or ask a lawyer who represents FCA whistleblowers.