Rolling Along with False Claims Act Enforcement Actions (Part III of IV)

Despite the controversial impact of the Supreme Court’s Escobar decision, the Justice Department’s False Claims Act prosecutions and settlements are continuing at a consistent rate – heading towards another multi-billion dollar year of FCA recoveries.

Some examples of these prosecutions and settlements will demonstrate my overall point – FCA risks are significant and healthcare providers, especially hospitals, have to devote time and attention to oversight and auditing their internal financial controls and government reimbursement submissions.

Prime Healthcare Services Inc. and its CEO recently agreed to pay $65 million to settle allegations the hospitals unnecessarily admitted Medicare patients and falsely billed the Medicare program.  Interestingly, the CEO is required to pay $3.25 million of the $65 million settlement.  Prime Healthcare Services also agreed to a five-year corporate integrity agreement.

The government alleged that from 2006 to 2013, Prime unnecessarily admitted Medicare patients who had shown up at the emergency rooms of several hospitals (rather than admit them through outpatient services).  According to the government, Dr. Reddy specifically pressured physicians to admit the Medicare patients and monitored whether hospitals were meeting a company quota for inpatient admissions.

Signature HealthCARE LLC (Signature), a Kentucky-based company agreed to pay approximately $30 million for False Claims Act violations by submitting false claims to Medicare for rehabilitation therapy services and forged pre-admission certifications of patient need for skilled nursing to Tennessee’s Medicaid program.

Signature: (1) presumptively placed patients in the highest therapy reimbursement level, rather than relying on individualized evaluations to determine the proper level of care; (2) provided the minimum number of minutes required to bill at a given reimbursement level; and (3) pressured therapist and patients to complete the planned minutes of therapy even when patients were sick or declined to participate in therapy.

SightLine Health LLC (SightLine) agreed to pay $11.5 million for submitting false claims to the Medicare program that violated the Anti-Kickback Statute (AKS).  SightLine targeted physicians to refer patients to its cancer treatment centers, and paid those physicians a share of its profits under an investment arrangement that was set up to provide compensation to physicians for such referrals.  Specifically, SightLine set up a string of leasing companies in which referring companies were permitted to invest and through which SightLine distributed the profits that its physician-investors generated by referring cancer patients for radiation therapy.

UPMC Hamot (Hamot), a hospital based in Erie, Pennsylvania and Medicor Associates, Inc, a regional cardiology practice, agreed to pay $20.75 million to settle False Claims Act violations for violations of the Anti-Kickback statute and the Physician Self-Referral law.  Hamot paid Medicor up to $2 million per year under twelve physician and administrative services contracts to secure Medicor patient referrals.  Hamot had no legitimate need for Medicor’s services and the payments were made to compensate Medicor for patient referrals.

Alere Inc. agreed to pay $33.2 million to resolve False Claims Act allegations caused by hospitals submitting false claims to Medicare, Medicaid and federal healthcare programs by selling materially unreliable point-of-care diagnostic testing devices.

Between 2006 and 2012, Alere sold its Triage devices which aid in the diagnosis of acute coronary syndromes, heart failure, drug overdoses and other serious conditions.  The device is typically used in emergency departments where timely decisions have to be made on patient care.  Alere was notified by numerous hospitals that certain devices produced erroneous results that created the potential for false positives  and false negatives.  Alere failed to undertake corrective actions until FDA inspections prompted a nationwide product recall.

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