False Claims-Qui Tam News

Whistleblowers are playing a key role in revealing Medicare kickback schemes disguised as so-called patient assistance programs. In April, five separate pharmaceutical companies paid a total of $247 million for running such programs. This week, a new qui tam suit was unsealed.

Kaiser Health News offers a round up on the case:

The American Kidney Fund is supposed to help patients pay for health insurance premiums and other costs for treatment based solely on a patient’s financial need, and not favor companies that donate to it. But a new whistleblower lawsuit claims the charity created a so-called blocked list of dialysis clinics whose patients would not get financial assistance while it made sure patients at clinics operated by DaVita and Fresenius would.

The story notes that the Department of Justice declined to join the case. The lawsuit makes many of the same claims outlined in a 2016 New York Times series. Here’s what the Times reports on the new developments:

The lawsuit, filed by David Gonzalez, who worked for 12 years at the kidney fund in its patient assistance program until he left in 2015, accused the charity of creating a so-called blocked list of dialysis clinics whose patients would not get financial assistance while making sure patients at clinics operated by DaVita and Fresenius would…
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Medicare and Medicaid are the deep pockets of the federal budget, paying out nearly $1 trillion in 2018. So, it’s no wonder the programs are targets for fraudsters. Some steal from the sick. Some steal money meant to soothe the dying.

So, a new Department of Health and Human Services report on poor quality hospice care is a reminder: Whistleblowers, who have helped expose hospice billing fraud under the False Claims Act, may also have a role in ensuring quality care. It is essential to protect the False Claims Act to target cases of Medicaid or Medicare fraud.

Increasingly, billing for substandard care is considered a form of fraud, attorney Nina Zhang wrote on the American Bar Association website in March.

The False Claims Act (FCA) has emerged, for better or for worse, as a quality enforcement tool. With quality of care as an ever-moving target by the federal government (with the constant development of new quality measures), the FCA has faced its share of criticism as too blunt of an instrument to regulate quality of healthcare, a matter that many argue is better left to the states under their police power…However, it can be argued that since the federal government is the biggest buyer of healthcare, it thus has a stake in how its monies are used.”

Whistleblower hospice cases generally involve care that was not needed or never delivered. In June, a Los Angeles doctor was charged in a $33 million fraud scheme that involved hospice care. Last year, a nurse blew the whistle on a for-profit hospital chain. Caris Healthcare agreed to repay $8 million for submitting hospice bills for patients who were ineligible for the because they were not terminally ill. Sometimes billing and quality of care are intertwined. In a 2018 Texas case, a doctor told an informant that the way you make money on hospice patients “is by keeping them alive as long as possible.”


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The Department of Justice announced last week that Encompass Health Corporation, formerly known as HealthSouth Corporation, has agreed to pay $48 million to resolve allegations that it was enrolling patients in its program and charging Medicare whether they would benefit from rehab or not. The DOJ called the company nation’s largest operator of inpatient rehabilitation facilities.

The qui tam cases were brought by a former company physician in Florida, the head of therapy at a Texas facility and the medical director at a Virginia hospital.

From the DOJ press release:

The government alleged that beginning in 2007, in order to ensure compliance with Medicare’s rules regarding classification as an (inpatient rehabilitation facility) IRF, and to increase Medicare reimbursement, some Encompass IRFs falsely diagnosed patients with what they referred to as “disuse myopathy” when there was no clinical evidence for this diagnosis. Additionally, Encompass IRFs allegedly admitted patients who were not eligible for admission to an IRF because they were too sick or disabled to participate in or benefit from intensive inpatient therapy.


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Citizens and activists can help stop environmental crime, but they need to know which laws apply, how to collect evidence and when to get a lawyer.

Different approaches to the role of citizens in collecting and reporting evidence of environmental crime were discussed last week by a three panelists at the Environmental Law Institute in Washington, DC.

In many cases, there is no meaningful law enforcement to stop environmental crimes. That’s where citizens can come in.

By understanding how to collect evidence and navigate whistleblower programs, anyone can help enforce environmental laws. Anyone includes, NGO staff, those impacted by crime or insiders, such as cruise ship crews.

John Kostyack, director of National Whistleblower Center, talked about a range of existing federal laws with provisions that reward citizens who come forward with credible information about environmental crime.  Shaun Goho of the environmental law clinic at Harvard Law School talked about how the courts are likely to interpret evidence and expert testimony. Stevie Lewis of the Public Laboratory for Open Technology and Science said the EPA has been slow to act on the recommendations in a 2016 report on promoting citizen science. But, her group hasn’t.

Kostyack started his talk with a slide of a small, endangered porpoise known as the vaquita, according to a video of the event.

“It’s really a fitting symbol of what we’re up against,” he said. “The forces that are driving this beautiful animal to extinction in its home in the Gulf of California are the same forces that are driving much of the environmental devastation around the world and those are the forces of crime.”


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Medicine is a profession with high ethical standards. At the same time, there is much money to be made. Bad players find ways to siphon some of the nearly $600 billion we spend on Medicare each year. So, both the health care industry and its regulators constantly struggle with how to cope with the kickbacks, conflicts of interest and billing for unnecessary care.

Illustration by Nora Valdez

Last year, $2.5 billion of the $2.8 billion in Department of Justice False Claim Act recoveries involved the health care industry. In 2019, whistleblowers working with the DOJ included hospital administrators, sales representatives, home health care workers, physicians and patients.

Now, they may have more muscle. Maria Durant, a partner with the firm Hogan and Lovells, told a group of lawyers gathered in Boston last week there has been a major shift in the way courts interpret the validity of medical opinion. She spoke at a conference on health care law held Thursday by the Boston Bar Association. 
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For a hospital that had once labored to break even, Wheeling Hospital displayed abnormally deep pockets when recruiting doctors.

To lure Dr. Adam Tune, an anesthesiologist from nearby Pittsburgh who specialized in pain management, the Catholic hospital built a clinic for him to run on its campus in Wheeling, W.Va. It paid Tune as much as $1.2 million a year — well above the salaries of 90% of pain management physicians across the nation, the federal government charged in a lawsuit filed this spring.

In addition, Wheeling paid an obstetrician-gynecologist a salary as high as $1.3 million a year, so much that her department bled money, according to a related lawsuit by a whistleblowing executive. The hospital paid a cardiothoracic surgeon $770,000 and let him take 12 weeks off each year even though his cardiac team also routinely ran in the red, that lawsuit said.

Despite the losses from these stratospheric salaries and perks, the recruitment efforts had a golden lining for Wheeling, the government asserts. Specialists in fields like labor and delivery, pain management and cardiology reliably referred patients for tests, procedures and other services Wheeling offered, earning the hospital millions of dollars, the lawsuit said.
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The Department of Justice announced Thursday that two pain management clinics in northern Virginia have agreed to pay approximately $3.3 million to settle Medicare fraud allegation brought by a qui tam whistleblower.

The settlement resolves allegations that National Spine and Pain Centers (NSPC), and Physical Medicine Associates (PMA) fraudulently billed Medicare and other federal healthcare providers. The programs charged for physician services that were delivered by nurse practitioners. The case also involved the ordering medically unnecessary urine drug tests. The whistleblower was former PMA physician assistant.

The case follows news of whistleblower lawsuits moving forward against a Tennessee-based chain of pain clinics for a similar scheme.
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Retaliation against whistleblowers takes many forms. A little person working at the White House recently reported a supervisor moved files to a high shelf out of her reach. Others report being followed, shunned, smeared, fired and worse. Whistleblowers often find themselves in a hostile work environment.

Julie Myers Wood, a corporate compliance consultant, thinks that works against both whistleblowers and their employers. In-house reporting programs with whistleblower protections built in are the way to go, writes Wood, who has a resume filled with high level federal government positions.

Institutions must shift their mindsets to view the reporting of regulatory problems as an opportunity to shine by addressing the problem, improving the institution and preventing large settlements. 

In a column posted on the Forbes website Monday, she suggests companies work with whistleblowers to both protect the company and strengthen compliance.

Companies need to get to a place where they embrace the potential whistleblower by creating a transparent culture, instilling the shared value of compliance at all levels.

Her advice is not aimed at whistleblowers, some of whom have had bad experiences with in-house hotlines. Advocates suggest employees approach internal reporting systems carefully – they are there to protect the company and can be used against whistleblowers.

Wood encourages the development of internal reporting programs with the message – let’s try to keep this in house. For companies, that is a good thing. But whistleblowers have found that internal reporting isn’t always effective or to their advantage. They have other options. Working with law enforcement or government agencies, they can remain anonymous in many cases and often qualify for a reward.  
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Two major whistleblower awards were revealed late last week.

Reuters is reporting a $1.7 million award to three Takata employees who exposed problems in airbag inflators.

In a separate case, CareWell Urgent Care Centers will pay $2 million to two states and the U.S. Department of Health and Human Services (HHS) to settle a case involving both overbilling and unnecessary care. The walk-in clinics allegedly overbilled Medicaid and the insurance plan for state employees, according to a release issued Friday from Massachusetts Attorney General Maura Healey. 

The case was triggered after a former CareWell nurse practitioner came forward, according to a story in The Boston Globe.

Aileen Cartier, who worked at several of the company’s locations for almost two years, said managers told staff to take medical histories and perform exams on patients that far exceeded what was needed for their simple ailments.
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Duke University reported in January that its scientists won $384.6 million last year from the National Institutes of Health, “ranking 9th in the country among universities, research institutions and teaching hospitals that are awarded the taxpayer-based research dollars.”

This week, they had to give some of it back.

Duke has agreed to pay $112.5 million to the U.S. Government to settle a suit brought by a whistleblowing lab tech. The case involves another research technician who fabricated data from 2006 to 2013. The findings were used in applications for some of those NIH-funded studies.

The government investigation began after Joseph M. Thomas brought a qui tam case under the False Claims Act. Thomas’s share of the settlement will be $33,750,000.

The Justice Department announcement quoted U.S. Attorney Matthew G.T. Martin saying that taxpayers expect federal grant dollars will be used honestly.

“Individuals and institutions that receive research funding from the federal government must be scrupulous in conducting research for the common good and rigorous in rooting out fraud,” the statement notes.  “May this serve as a lesson that the use of false or fabricated data in grant applications or reports is completely unacceptable.”
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