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United States ex rel. John Doe v. Medi-Lynx and Spectocor, et al., Docket No. 14-CV-1387 (D. N.J.)

 

In this whistleblower case, Defendants Medi-Lynx, AMI, and Spectocor designed and used an online enrollment portal to steer physician customers who used the Defendants’ PocketECG device to select the most expensive monitoring service, telemetry, for their Medicare patients even though the physicians intended to select less expensive monitoring services, such as Holter or event monitoring. Through this scheme, Defendants submitted, and caused the submission of, false claims to Medicare for unnecessary and unreasonable telemetry services.

 

 

 

Under the terms of the settlement, the companies and Joseph H. Bogdan, owner of AMI and Spectocor, have agreed to pay more than $13.4 million to resolve allegations that they defrauded Medicare through a scheme to cause unwitting physicians to order cardiac monitoring services at the greatest level of reimbursement regardless of medical necessity or reasonableness. The whistleblower, Eben Steele, a former employee of AMI/Spectocor, brought Defendants’ fraud to light by filing a complaint in March 2014 in U.S. District Court in New Jersey. For his efforts, Mr. Steele will receive some $2.43 million from the government.

 

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United States ex rel. John Doe v. Biotelemetry, Inc., Cardionet, Inc., and Mednet Healthcare Technologies, Inc., Docket No. 14-CV-05980 (D. N.J.)

 

In this federal False Claims Act case brought by a whistleblower client of Ms. Durrell and Mr. Thomas, MedNet Healthcare Technologies, Inc. (“MedNet”), a subsidiary of BioTelemetry, Inc., aggressively marketed to providers the financial advantage of what it called “Split Bill Medicare and Fee for Service for Private Payors” — arrangements intended to induce doctors to use MedNet’s cardiac monitoring services because it would be more profitable to the provider than using the services of a competitor of MedNet.  MedNet operates as an Independent Diagnostic Testing Facility (“IDTF”) providing remote cardiac monitoring services under exclusive supplier agreements with health care providers such as physicians and hospitals.

 

 

The whistleblower complaint filed in September 2014 in U.S. District Court in Newark, New Jersey alleged that MedNet acted and conspired to establish a fraudulent billing scheme through which it provided kickbacks to physicians and health care providers as an inducement to gain referrals for cardiac monitoring services reimbursed by Government Health Care Programs such as Medicare, in violation of the Medicare-Medicaid Anti-Kickback Statute. As a result, MedNet violated the Federal False Claims Act when the services were charged to Medicare. This scheme enabled MedNet to gain market share from its competitors and realize greater profits.  MedNet has agreed to pay $1,350,000 to resolve these allegations.

 

 

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United States ex rel. John Does v. Regional Home Care, Inc. d/b/a North Atlantic Medical also d/b/a North Atlantic Medical Tolman Clinical Laboratory and as North Atlantic Medical Services, Docket No. 12-CA-11979 (D. Mass.)

 

This whistleblower case was brought against North Atlantic Medical Services Inc. (NAMS), doing business as Regional Home Care Inc.  NAMS is a medical device company based in Massachusetts that provides equipment and services for the treatment of respiratory ailments, such as oxygen deficiency and sleep apnea.  The complaint filed in 2012 in U.S. District Court in Boston alleged that NAMS knowingly violated Medicare and Medicaid billing requirements for sleep therapy and oxygen services in the home, and as a result, violated the Federal and Massachusetts False Claims Acts when it charged Medicare and Medicaid for those services.  Under the terms of the settlement, NAMS agreed to pay $852,378 to resolve allegations that it used unlicensed employees to set up sleep apnea masks and oxygen therapy equipment for patients in Massachusetts and billed Medicare and Medicaid for these services.

 

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United States ex rel. CAF Partners v. Amedisys, et al., Civ. No.:10-cv-02323 (E.D. PA)

 

This whistleblower case was filed against Louisiana based home healthcare provider Amedisys, Inc. (“Amedisys”) to resolve civil fraud liabilities under the Federal False Claims Act (“FCA”) for $150 million. In addition to paying a $150 million civil settlement, Amedisys will be bound by a Corporate Integrity Agreement (“CIA”) with the Office of Inspector General of the United States Department of Health and Human Services (“OIG-HHS”). This settlement, announced in April 2014, is by far the largest home healthcare settlement in the history of the FCA.

 

This settlement marked the successful conclusion of a nearly six year effort by CAF Partners to expose fraudulent practices by home health behemoth Amedisys. While the case was filed in 2010, in fact, actions by one of the partners date back to September 2008 when, voluntarily, and out of a sense of duty, the individual placed a call to a regional office of the OIG-HHS. On that call, and over the course of a year of follow-up discussions with the government, the individual articulated well-founded allegations regarding a systematic manipulation of data by Amedisys to make patients appear sicker than they actually were in order to justify extra, unnecessary therapy visits to qualify for bonus payments under the Medicare Home Health Prospective Payment System (“PPS”).  The members of CAF Partners who joined with this individual also brought unique and valuable insight into the use, and impact, of Amedisys’s proprietary software system. Through this system, CAF Partners alleged that Amedisys sought, not only, to admit, and subsequently recertify, patients to home health care that did not meet the Medicare guidelines for services, but also targeted patients for recertification in order to qualify for higher reimbursement from Medicare.

 

Kenney & McCafferty were co-counsel in this case.

 

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United States et al. ex rel. Westmoreland v. Amgen, Inc., et al., Civil Action No. 06-10972-WGY (D. Mass.) (settlement December 2012)

 

This whistleblower case centered around allegations that Amgen, in manufacturing single use vials of its drug Aranesp, had intentionally manipulated the amount of “overfill” to increase the vial volume beyond that needed to ensure delivery of the labeled dosage. Amgen then encouraged doctors to bill Medicare and Medicaid for the overfill, which typically was more than the indicated or prescribed dose, and thereby increase their reimbursement from government insurers.

 

Amgen provided and marketed the extra Aranesp overfill to encourage the purchase and use of Aranesp and to distinguish Aranesp from a  competing drug, Procrit, which Amgen also manufactured, but which was sold by Ortho Biotech/Johnson & Johnson under a licensing agreement.  By providing extra Aranesp in every vial and encouraging doctors to bill insurers – including Medicare and Medicaid and other government programs– for that overfill, Amgen presented an economic inducement for doctors  to purchase Aranesp rather than Procrit.

 

This scheme constituted a kickback funded unknowingly by the government, and increased Aranesp’s market share and  profits.  This kind of economic inducement, designed to alter a physician’s medical judgment, violates the federal Anti‐Kickback Statute, a criminal statute.

 

The Relator, Kassie Westmoreland, with the assistance of her attorneys, alleged that Amgen and INN had systematically promoted “overfill billing” in order to change doctors’ prescribing patterns. During discovery, documents and deposition testimony confirmed that Amgen, in conspiracy with INN, had used overfill to entice physicians to choose Aranesp based on the promise of increased Medicare and Medicaid reimbursement for the overfill.

 

Five Amgen employees at different levels of the company – from sales representative to National Sales Director – elected to stand on their Fifth Amendment rights against self‐incrimination rather than provide any testimony regarding these practices at Amgen.  (When witnesses assert the Fifth in a civil case, a presumption arises that the testimony would be adverse to the party whose interests are aligned with the witnesses.)

 

The case was unsealed in 2009, and several states intervened. The United States indicated it was “not intervening at that time” but was continuing its civil and criminal investigation of the company.  This meant that Kassie Westmoreland and her legal team had to “carry the ball” as the government prosecutors continued to investigate.

 

After over two years of intense litigation resulting in four published federal court opinions, the case was scheduled to go to trial in the United States District Court in Boston on October 17, 2011. Just prior to trial, Amgen settled the case for $762 million.  The settlement resolved Kassie Westmoreland’s case on the eve of trial, as well as other whistleblower suits that had remained under seal.

 

Several co-counsel assisted in this litigation, including Kester & Isenberg, Rory Delaney, and Kellogg, Huber, Hansen, Todd, Evans & Figel.

 

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United States ex rel. SF United Partners, et al. v. WellCare Health Plans, Inc., et al., Case No. 3:07cv1688 (SRU) (D. Conn.) (criminal and civil settlement 2011 and 2009)

 

This whistleblower case was brought against WellCare, a leading health management organization that provides or arranges for the provision of managed care services under government-sponsored healthcare programs. It operates a variety of Medicaid and Medicare plans, including prescription drug plans, pursuant to contracts with the federal and state governments. The whistleblower complaint alleged that WellCare knowingly violated the law, its contracts, several provisions of the Federal and comparable State False Claims Acts, and the Medicare and Medicaid Anti-Kickback Act by, among other things: overstating its expenses in delivering health care and underreporting its profit margin and Medical Loss Ratio; manipulating its Incurred But Not Reported (IBNR) (an actuarial estimate of claims which have not yet been reported or paid, but are likely to be incurred within a certain time frame), upcoding services, claims, and disease states by manipulating the Risk Adjusted Payment System (RAPS), which is used by CMS to calculate the per member per month (PMPM) premium paid to health plans such as WellCare; offering and paying illegal remuneration and kickbacks to participating physicians; operating a sham Special Investigations Unit (SIU) that failed to perform its oversight responsibilities with respect to claims submitted to Medicare and Medicaid by providers and third party administrators, and claims associated with its Medicare Part D Prescription Drug Plan; and engaging in sales and marketing abuses.

 

In April 2011 the United States, nine states, WellCare, and several whistleblowers reached an agreement to resolve WellCare’s civil liabilities under the False Claims Act for $137.5 million. As part of that settlement, WellCare also entered into a Corporate Integrity Agreement with the HHS Office of the Inspector General. WellCare had previously resolved its criminal liabilities by agreeing to pay $80 million as part of a Deferred Prosecution Agreement with the United States in May 2009, and at that time also resolved its potential liabilities to the SEC by entering into a consent judgment and agreeing to pay a civil penalty of $10 million.

 

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United States, et al. v. Elan Corporation, PLC, and Eisai Inc., Civil Action No. 04-11594-RWZ (D. Mass.) (criminal and civil settlement 2010)

 

This whistleblower case filed in 2004 involved allegations of improper “off-label” marketing and billing of the anti-seizure drug Zonegran, first by Irish pharmaceutical manufacturer Elan Corps then later by Japanese pharmaceutical company Eisai, Inc., which bought the rights to the drug from Elan in 2004.

 

In a settlement announced by the Department of Justice and several state Attorneys General in December 2010, Elan Corp. agreed to plead guilty to introducing misbranded drugs into interstate commerce, in violation of the federal Food Drug and Cosmetic Act, and pay criminal fines and forfeitures of just over $100 million. Elan also paid $102,890,517 plus interest, in civil damages for violations of the False Claims Act resulting from improper billings to federal and state health insurance programs such as Medicare and Medicaid. The Elan criminal and civil settlements combined exceeded $203 million. Elan also entered into a Corporate Integrity Agreement with the HHS OIG.

 

In addition, Eisai Inc. separately agreed to pay $11 million in civil damages under the False Claims Act to the federal and state governments for the period of time the off-label marketing continued after it acquired the rights to the drug.

 

The whistleblower’s complaint alleged that the defendant companies marketed Zonegran, which was approved only for reducing seizures, for weight loss and mood stabilization as well. The drug was not and is not approved for either of those uses. The increase in drug prescriptions resulting from this off-label marketing not only caused improper billings to the federal and state governments, but it also undercut the authority of the U.S. Food and Drug Administration, which determines the safety and efficacy of drug products and approves (and limits) their uses.

 

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United States ex rel Gobble, et al. v. Forest Laboratories, Civil Action No.03-10395-NMG (D. Mass.) (criminal and civil settlement 2010)

 

In this case, the whistleblower alleged that Forest Pharmaceuticals, Inc., a subsidiary of New York City-based Forest Laboratories, Inc., and Forest Laboratories violated federal and state False Claims Acts by engaging in off label marketing of the anti-depressant drugs Celexa and Lexapro, and kickbacks to physicians that resulted in illegal billings to federal health care programs.

 

After a lengthy federal investigation, Forest reached an agreement with the Department of Justice and several state Attorneys General to resolve its criminal and civil liabilities. Under the agreement, Forest Pharmaceuticals, Inc pled guilty, paid a criminal fine of $150 million, and forfeited an additional $14 million in assets for charges relating to obstruction of justice, the illegal promotion of Celexa, an anti-depressant drug for use in treating children and adolescents, and the distribution of Levothroid, an unapproved new drug used to treat hypothyroidism. The companies also agreed to pay over $149 million to resolve allegations under the False Claims Act, including a civil complaint filed by the United States in February 2009 as part of its intervention in the whistleblower’s case. that Forest caused false claims to be submitted to federal health care programs for the drugs Celexa, Lexapro, and Levothroid. In total, Forest agreed to pay more than $313 million to resolve its criminal and civil liability arising from these matters. It also entered into a Corporate Integrity Agreement with the HHS OIG.

 

The whistleblower also alleged that Forest had illegally retaliated against him by firing him after he raised questions about Forest’s illegal behavior. The court ruled that his claim could proceed See United States ex rel. Gobble et al. v. Forest Labs, et al., 729 F.Supp.2d 446 (D. Mass. 2010).

 

Mr. Thomas and Ms. Durrell were co-counsel in this case with attorneys Marlan Wilbanks and Ty Bridges of Wilbanks & Bridges, LLP.

 

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United States, et al. Collins v. Pfizer Inc., Civil Action No.04-11780-DPW (D. Mass.) (criminal and civil settlement 2009)

 

Pfizer Inc. paid approximately $2.3 billion dollars to settle claims that, among other things, the company misbranded one of its pain killer drugs, promoted the off label use of numerous drugs, and paid kickbacks to doctors to induce or reward the prescription of Pfizer drugs. As part of the settlement, Pfizer subsidiary Pharmacia & Upjohn Company, Inc. (“Pharmacia”) entered a guilty plea to a federal criminal indictment charging that the company “misbranded” the painkiller Bextra (valdecoxib) by promoting the drug for variety of conditions and at dosages other than those for which its use was approved by the Food and Drug Administration. Bextra was withdrawn from the market in 2005 after concerns about its safety profile, especially for cardiovascular risks, in long term users of the drug.

 

Mr. Thomas and Ms. Durrell represented one of the whistleblowers whose claims were settled as part of this record breaking agreement. Their client’s case alleged nationwide misconduct in which Pfizer paid illegal remuneration for speaker programs, mentorships, preceptorships, so-called “journal clubs”, and gifts (including entertainment, cash, travel and meals) to health care professionals to induce them to promote and prescribe several drugs, including Lipitor, Norvasc, Viagra, Zithromax, and Zyrtec, in violation of the Medicare and Medicaid Anti-Kickback Act and the False Claims Act. He also alleged that Pfizer had retaliated against him.

 

A number of other such suits were filed by other whistleblowers. The government was able to substantiate allegations made in a number of the law suits and Pfizer agreed to pay a record-breaking criminal recovery of $1.3 billion dollars in addition to $1 billion to settle the civil cases alleging that the company caused the submission of false claims to the federal and states’ governments. Pfizer also entered into a Corporate Integrity Agreement with the HHS OIG.

 

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United States and Commonwealth of Massachusetts ex rel. Johnston v. Aggregate Industries, PLC, et al., Civil Action No. 06-11379-GAO (D. Mass.) (criminal and civil settlements 2007 and 2008) (a/k/a the “Big Dig” settlements)

 

This whistleblower suit alleged wrongdoing in connection with the $14.6 billion reconstruction of downtown Boston’s roadways, tunnels, and bridges known as the “Big Dig”. Among other things, he alleged that defendant Aggregate Industries supplied out –of-specification or non-conforming concrete to the Big Dig and that defendants Aggregate, Bechtel, and Parsons Brinckerhoff failed to properly oversee the construction and as a result false or fraudulent claims for payment were submitted to the government and paid. His claims (and those of other whistleblowers) were settled as part of the settlements between the federal and state government and the defendants in 2007 and 2008.

 

In the 2007 settlement, defendant Aggregate Industries Northeast Region, Inc. F/K/A Bardon Trimount and Aggregate Industries, Inc. (“Aggregate”) paid over $42 million to resolve a criminal and civil investigation into Aggregate supplying 5,700 loads of out-of-specification or non-conforming “10-9” concrete to the Big Dig. As part of this Big Dig concrete settlement, Aggregate Industries Northeast Region pled guilty to criminal charges that it conspired to submit false or fraudulent claims to the Government for that concrete and paid a criminal fine. Aggregate also settled the Government’s civil claims, initiated by whistleblowers, by paying over $15.5 million to the Government under the federal and state False Claims Acts. Aggregate also agreed to contribute over $27 million to a fund to be used for future repairs on the Big Dig and Aggregate entered into a Compliance Agreement with the federal Department of Transportation.

 

In the 2008 settlement, defendants Bechtel and Parsons Brinckerhoff, the management consultants to the Big Dig, agreed to pay over $400 million to resolve their civil and criminal liabilities in connection with the “Big Dig” project, including, among others, liability stemming from their failure to institute concrete testing protocols at the construction site as well as in the materials lab to determine that all concrete delivered to the Big Dig by Aggregate met specifications and was placed pursuant to procedures.

 

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United States ex rel. Donigian v, St. Jude Medical Center, Civil Action No. 06-11166-DPW (D. Mass.) (civil settlement 2010)

 

This False Claims Act qui tam suit filed in 2006 was resolved by St. Jude Medical Inc. of St. Paul, Minn., agreeing to pay the United States $16 million to resolve allegations raised by the whistleblower that the company used post-market studies and a registry to pay kickbacks to induce physicians to implant the company’s pacemakers and defibrillators.

 

Post-market studies are intended to assess the clinical performance of a medical device or drug after that device or drug has been approved by the Food and Drug Administration. Registries are collections of data maintained by a device manufacturer concerning its products that have been sold and implanted in patients. St. Jude used three post-market studies and a device registry as vehicles to pay participating physicians kickbacks to induce them to implant St. Jude pacemakers and defibrillators. Although St. Jude collected data and information from participating physicians, it is alleged that the company knowingly and intentionally used the studies and registry as a means of increasing its device sales by paying certain physicians to select St. Jude pacemakers and implantable cardioverter defibrillator for their patients. In each case, St. Jude paid each participating physician a fee that ranged up to $2,000 per patient. St. Jude solicited physicians for the studies in order to retain their business and/or convert their business from a competitor’s product.

 

Mr. Thomas and Ms. Durrell were co-counsel in this case with attorneys Ken Nolan and Marcella Auerbach of Nolan & Auerbach, P.A.

 

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United States and the Commonwealth of Massachusetts et al. v. East Boston Neighborhood Health Center Corp., et al., Civil Action No. 03-12360-MLW (D. Mass.) (civil settlement 2008)

 

In this False Claims Act qui tam case filed in 2003, the whistleblower alleged that Boston Medical Center (BMC) and its community health center, East Boston Neighborhood Health Center (EBNHC) submitted inappropriate charges to the Massachusetts Uncompensated Care Pool for emergency services performed at the health center. The Massachusetts Uncompensated Care Pool, now known as the Health Safety Net Trust Fund, and commonly referred to as the “Free Care Pool”, provides reimbursement to acute care hospitals and community health centers for medically necessary services provided to low-income, uninsured and underinsured residents of Massachusetts. The Free Care Pool is funded in part by the federal and state governments.

 

The United States Attorney’s Office and the Massachusetts Attorney General’s Office investigated the whistleblower’s allegations and a civil settlement agreement was reached in 2008. Under the terms of the agreement, BMC and EBNHC paid $600,000. Boston Medical Center and East Boston Neighborhood Health Center also agreed to enter into discussions with the Massachusetts Department of Public Health regarding the standards for operation in the Urgent Care Department of EBNHC. The whistleblower alleged that East Boston Neighborhood Health Center and Boston Medical Center overcharged the government for services provided to patients seen in the Urgent Care Department of EBNHC. The alleged overcharges submitted to the Free Care Pool were designed to compensate healthcare providers that are usually not open after 10:00 p.m. on Sundays, holidays, or for emergencies. However, the Urgent Care Department was open for urgent care and emergencies 24 hours a day, 7 days a week. By submitting these charges, authorities alleged that EBNHC increased its overall reimbursement from the Uncompensated Care Pool during the fiscal years of 2003 to 2006.

 

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United States, et al. v. Serono, Inc., C.A. No. 03-CV-11892 (D. Mass) (criminal and civil settlement 2005)

 

In this case, Mr. Thomas represented a whistleblower who filed a successful False Claims Act qui tam complaint against Serono, Inc., the Swiss manufacturer of the AIDS treatment drug Serostim. In a then record settlement reached with the Department of Justice and several state Attorneys General, Serono agreed to pay $704 million and plead guilty to scheming to boost sagging sales by, among other things, offering kickbacks to doctors to write prescriptions. As part of the plea, Serono Laboratories was barred from participating in federal health programs for five years, paid a criminal fine of $136.9 million, and paid $567 million to resolve its civil liabilities under the False Claims Act. Serono also entered into a Corporate Integrity Agreement with the HHS OIG.

 

Serostim, which contains the human growth hormone Somatropin, was approved by the Food and Drug Administration in 1996 to treat AIDS wasting, an often-fatal condition involving severe weight loss. At about the time the FDA approved the drug, protease inhibitor drugs came on the market. Those drugs, when used in combinations or “cocktails,” sharply curtailed the AIDS virus in patients, making them less prone to AIDS wasting. Serono offered doctors free trips to the south of France in return for agreeing to write up to 30 new prescriptions for Serostim, which cost $21,000 for a 12-week treatment regimen. The company also conspired to introduce a new test for AIDS wasting, despite not having FDA approval. The test diagnosed AIDS wasting even in the absence of weight loss, with the United States estimating that 85 percent of the resulting Serostim prescriptions were unnecessary.

 

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United States and the Commonwealth of Massachusetts et al. v. Tushar C. Patel, M.D. d/b/a HCI/Metromedic Health Center and Fall River Walk-In Emergency Medical Office, P.C., Civil Action No. 03-11828-MLW (D. Mass.) (civil settlement 2005)

 

In this False Claims Act qui tam case, the whistleblower alleged that defendants were billing and causing the billing of federal and state government health insurance programs for false and fraudulent claims generated by the Defendants’ clinics and medical offices. These false and fraudulent claims involved “upcoding” on government insurance claim forms, the ordering of medically unnecessary tests, and submission of claims with materially false information concerning the identity of the patients’ doctor(s), whether the medical visit in question had occurred at all, and the true nature and extent of the patient’s visit in those instances when the patient had been in one of the defendants’ clinics.

 

Defendant Fall River Walk-In Emergency Medical Office (“FRWI”) was indicted on December 7, 2004 by a Bristol County grand jury on one count each of violation of the Medicaid False Claims Act and larceny over $250. The indictments alleged that from May 2000 through May 2003, the corporation systematically defrauded the Medicaid program of $85,650 by filing 6,346 claims for physical therapy services performed by chiropractors for hundreds of patients.

 

In June 2005, the defendants reached a civil settlement agreement with the government, under which the defendants paid $315,000 to resolve the allegations raised in the whistleblower’s complaint. In addition, defendant FRWI entered into a plea agreement with the Commonwealth of Massachusetts and agreed to pay $85,000 in restitution to the Medicaid program.

 

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