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In this assignment you will have an opportunity to review an annual report produced by the Department of Justice. The report summarizes compliance activities conducted by Federal agencies and the outcomes of cases which have been prosecuted.

While reviewing and preparing for this assignment, take notice of the multiple laws, statutes and regulations involved in the prosecution of violators, such as:

  • Affordable Care Act
  • False Claims Act
  • Stark Law
  • Anti-kickback statute.

Use the Annual Report to Answer to questions on the worksheet

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The Department of Health and Human Services And The Department of Justice Health Care Fraud and Abuse Control Program Annual Report for Fiscal Year 2015 FEBRUARY 2016 TABLE OF CONTENTS I. Executive Summary 1 Statutory Background 3 III. Program Results and Accomplishments Monetary Results Expenditures Overall Recoveries Health Care Fraud Prevention and Enforcement Action Team Health Care Fraud Prevention Partnership Medicare Fraud Strike Force Highlights of Successful Criminal and Civil Investigations 5 5 7 8 8 9 10 12 IV. Department of Health and Human Services Office of Inspector General Centers for Medicare & Medicaid Services Administration on Community Living Office of the General Counsel Food and Drug Administration Pharmaceutical Fraud Program 36 36 45 56 58 62 Department of Justice United States Attorneys Civil Division Criminal Division Civil Rights Division 64 64 66 69 72 Appendix Federal Bureau of Investigation Return on Investment Calculation Total HCFAC Resources 77 77 80 81 Glossary of Terms 82 II. V. VI. VII. GENERAL NOTE All years are fiscal years unless otherwise noted in the text. EXECUTIVE SUMMARY The Health Insurance Portability and Accountability Act of 1996 (HIPAA) established a national Health Care Fraud and Abuse Control Program (HCFAC or the Program) under the joint direction of the Attorney General and the Secretary of the Department of Health and Human Services (HHS)1, acting through the Inspector General, designed to coordinate federal, state and local law enforcement activities with respect to health care fraud and abuse. In its nineteenth year of operation, the Program’s continued success confirms the soundness of a collaborative approach to identify and prosecute the most egregious instances of health care fraud, to prevent future fraud and abuse, and to protect program beneficiaries. Monetary Results During Fiscal Year (FY) 2015, the Federal Government won or negotiated over $1.9 billion in health care fraud judgments and settlements2, and it attained additional administrative impositions in health care fraud cases and proceedings. As a result of these efforts, as well as those of preceding years, in FY 2015, approximately $2.4 billion was returned to the Federal Government or paid to private persons. Of this $2.4 billion, the Medicare Trust Funds3 received transfers of approximately $1.6 billion during this period, and $135.9 million in Federal Medicaid money was similarly transferred separately to the Treasury as a result of these efforts. Of the approximately $29.4 billion returned by the HCFAC account to the Medicare Trust Funds since the inception of the Program in 1997, over $16.2 billion has been returned between 2009 and 2015. Enforcement Actions In FY 2015, the Department of Justice (DOJ) opened 983 new criminal health care fraud investigations. Federal prosecutors filed criminal charges in 463 cases involving 888 defendants. A total of 613 defendants were convicted of health care fraud-related crimes during the year. Also in FY 2015, DOJ opened 808 new civil health care fraud investigations and had 1,048 civil health care fraud matters pending at the end of the fiscal year. In FY 2015, the FBI investigative efforts resulted in over 625 operational disruptions of criminal fraud organizations and the dismantlement of the criminal hierarchy of more than 144 health care fraud criminal enterprises. In FY 2015, HHS’ Office of Inspector General (HHS-OIG) investigations resulted in 800 criminal actions against individuals or entities that engaged in crimes related to Medicare and Medicaid, and 667 civil actions, which include false claims and unjust-enrichment lawsuits filed in federal district court, civil monetary penalties (CMP) settlements, and administrative recoveries related to provider self-disclosure matters. HHS-OIG also excluded 4,112 individuals 1 Hereafter, referred to as the Secretary. The amount reported as won or negotiated only reflects the federal recoveries and therefore does not reflect state Medicaid monies recovered as part of any global federal-state settlements. 3 Also known as the Medicare Hospital Insurance (Part A) Trust Fund and the Supplemental Medical Insurance (Part B) Trust Fund. 2 1 and entities from participation in Medicare, Medicaid, and other federal health care programs. Among these were exclusions based on criminal convictions for crimes related to Medicare and Medicaid (1,329) or to other health care programs (424), for patient abuse or neglect (302), and as a result of licensure revocations (1,743). HHS-OIG also issued numerous audits and evaluations with recommendations that, when implemented, would correct program vulnerabilities and save program funds. Sequestration Impact Due to sequestration of mandatory funding in 2015, there were fewer resources for DOJ, FBI, HHS, and HHS-OIG to fight fraud and abuses against Medicare, Medicaid, and other health care programs. A total of $22.0 million was sequestered from the HCFAC program in FY 2015, for a combined total of $74.2 million in the past three years. Including funds sequestered from the FBI, the total equals $101.2 million in the past three years. 2 STATUTORY BACKGROUND The Annual Report of the Attorney General and the Secretary detailing expenditures and revenues under the Health Care Fraud and Abuse Control Program for Fiscal Year 2015 is provided as required by Section 1817(k)(5) of the Social Security Act. The Social Security Act Section 1128C(a), as established by the Health Insurance Portability and Accountability Act of 1996 (P.L. 104-191, HIPAA or the Act), created the Health Care Fraud and Abuse Control Program, a far-reaching program to combat fraud and abuse in health care, including both public and private health plans. As was the case before HIPAA, amounts paid to Medicare in restitution or for compensatory damages must be deposited in the Medicare Trust Funds. The Act requires that an amount equaling recoveries from health care investigations—including criminal fines, forfeitures, civil settlements and judgments, and administrative penalties—also be deposited in the Trust Funds. The Act appropriates monies from the Medicare Hospital Insurance Trust Fund to an expenditure account, called the Health Care Fraud and Abuse Control Account (the Account), in amounts that the Secretary and Attorney General jointly certify as necessary to finance anti-fraud activities. The maximum amounts available for certification are specified in the Act. Certain of these sums are to be used only for activities of the HHS-OIG, with respect to the Medicare and Medicaid programs. In FY 2006, the Tax Relief and Health Care Act (TRHCA) (P.L 109-432, §303) amended the Act so that funds allotted from the Account are “available until expended.” TRHCA also allowed for yearly increases to the Account based on the change in the consumer price index for all urban consumers (all items, United States city average) (CPI-U) over the previous fiscal year for fiscal years for 2007 through 2010.4 In FY 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, collectively referred to as the Affordable Care Act (P.L. 111-148, ACA) extended permanently the yearly increases to the Account based upon the change in the consumer price index for all urban consumers, or CPI-U. In FY 2015, the Secretary and the Attorney General certified $279.7 million in mandatory funding to the Account after accounting for sequester reductions of $22.0 million to the total appropriation. Additionally, Congress appropriated $672.0 million in discretionary funding. A detailed breakdown of the allocation of these funds is set forth later in this report. HCFAC appropriations generally supplement the direct appropriations of HHS that are devoted to health care fraud enforcement and supported over two-thirds of DOJ’s health care fraud funding and over three-fourths of HHS-OIG’s appropriated budget in FY 2015. (Separately, the FBI, which is discussed in the appendix, received $129.2 million from HIPAA, after accounting for $10.2 million in mandatory sequester reductions.) Under the joint direction of the Attorney General and the Secretary, the Program’s goals are: 4 The CPI-U adjustment in TRHCA did not apply to the Medicare Integrity Program (MIP). Section 6402 of the ACA indexed Medicare Integrity Program funding to inflation starting in FY 2010. 3 (1) to coordinate federal, state and local law enforcement efforts relating to health care fraud and abuse with respect to health plans; (2) to conduct investigations, audits, inspections, and evaluations relating to the delivery of and payment for health care in the United States; (3) to facilitate enforcement of all applicable remedies for such fraud; and (4) to provide education and guidance regarding complying with current health care law. The Act requires the Attorney General and the Secretary to submit a joint annual report to the Congress that identifies both: (1) the amounts appropriated to the Trust Funds for the previous fiscal year under various categories and the source of such amounts; and (2) the amounts appropriated from the Trust Funds for such year for use by the Attorney General and the Secretary and the justification for the expenditure of such amounts. This annual report fulfills the above statutory requirements. Additionally, this report fulfills the requirement in the annual discretionary HCFAC appropriation (Public Law 113-235 “Consolidated and Further Continuing Appropriations Act, 2015”) that this report “include measures of the operational efficiency and impact on fraud, waste, and abuse in the Medicare, Medicaid, and CHIP programs for the funds provided by this appropriation.” 4 PROGRAM RESULTS AND ACCOMPLISHMENTS As required by the Act, HHS and DOJ must detail in this Annual Report the amounts deposited to the Medicare Trust Funds and the source of such deposits. In FY 2015, approximately $2.4 billion was deposited with the Department of the Treasury and CMS, transferred to other federal agencies administering health care programs, or paid to private persons during the fiscal year. Monetary results from these transfers and deposits are provided in the table below: Monetary Results: Total Transfers/Deposits by Recipient FY 2015 Department of the Treasury Deposits to the Medicare Trust Funds, as required by HIPAA Gifts and Bequests Amount Equal to Criminal Fines Civil Monetary Penalties Asset Forfeiture Penalties and Multiple Damages Subtotal Centers for Medicare & Medicaid Services HHS-OIG Audit Disallowances — Recovered - Medicare Restitution/Compensatory Damages Subtotal* Grand Total of Amounts Transferred to the Medicare Trust Funds Amount $10,372 56,549,115 45,772,271 14,791,644 512,054,108 629,177,509 132,612,502 793,934,739 926,547,241 $1,555,724,750 Restitution/Compensatory Damages to Federal Agencies HHS/Other TRICARE CMS HHS-OIG Cost of Audits, Investigations and Compliance Monitoring Other Agencies Centers for Medicare and Medicaid Services Federal Share of Medicaid HHS-OIG Audit Disallowances — Recovered - Medicaid Subtotal Relators= Payments** TOTAL*** $31,355,848 14,921,254 8,253,589 7,766,281 18,200,774 135,866,585 168,955,572 385,319,903 414,456,455 $2,355,501,108 *Restitution, compensatory damages, and recovered audit disallowances include returns to both the Medicare Hospital Insurance (Part A) Trust Fund and the Supplemental Medical Insurance (Part B) Trust Fund. **These are funds awarded to private persons who file suits on behalf of the Federal Government under the qui tam (whistleblower) provisions of the False Claims Act, 31 U.S.C. ' 3730(b). ***State funds are also collected on behalf of state Medicaid programs; only the Federal share of Medicaid funds transferred to CMS are represented here. 5 The above transfers include certain collections, or amounts equal to certain collections, required by HIPAA to be deposited directly into the Medicare Trust Funds. These amounts include: (1) Gifts and bequests made unconditionally to the Trust Funds, for the benefit of the Account or any activity financed through the Account; (2) Criminal fines recovered in cases involving a federal health care offense, including collections under section 24(a) of Title 18, United States Code (relating to health care fraud); (3) Civil monetary penalties in cases involving a federal health care offense; (4) Amounts resulting from the forfeiture of property by reason of a federal health care offense, including collections under section 982(a)(7) of Title 18, United States Code; and (5) Penalties and damages obtained and otherwise creditable to miscellaneous receipts of the general fund of the Treasury obtained under sections 3729 through 3733 of Title 31, United States Code (known as the False Claims Act, or FCA), in cases involving claims related to the provision of health care items and services (other than funds awarded to a relator, for restitution or otherwise authorized by law). 6 Expenditures In the nineteenth year of operation, the Secretary and the Attorney General certified $279.7 million in mandatory funding as necessary for the Program, after accounting for mandatory sequester reductions of $22.0 million as required by law. Additionally, Congress appropriated $672.0 million in discretionary funding. See allocation by recipient below: FY 2015 ALLOCATION OF HCFAC APPROPRIATION Organization Department of Health and Human Services Office of Inspector General6 Office of the General Counsel Administration for Community Living Food and Drug Administration Centers for Medicare & Medicaid Services Unallocated Funding Subtotal Department of Justice United States Attorneys Civil Division7 Criminal Division Civil Rights Division Justice Management Division Department of Justice - Other Subtotal TOTAL8 Mandatory Allocation5 $200,718,475 10,000,000 Discretionary Allocation Funds Sequestered Total Allocation $67,200,000 ($14,652,449) $253,266,026 0 0 10,000,000 8,710,136 0 0 8,710,136 3,377,220 0 0 3,377,220 13,500,000 544,320,000 0 577,820,000 2,802,456 239,108,287 0 611,520,000 (2,802,456) (17,454,905) 0 853,173,382 31,400,000 19,538,751 4,580,184 2,376,000 200,000 4,574,898 62,669,833 20,505,542 12,093,818 10,162,659 5,443,276 100,000 12,174,705 60,480,000 (4,574,898) (4,574,898) 51,905,542 31,632,569 14,742,843 7,819,276 300,000 12,174,705 118,574,935 $301,778,120 5 $672,000,000 ($22,029,803) $971,748,317 As of FY 2007, mandatory funds are available until expended. Discretionary funds are available for two years. In addition, HHS-OIG obligated $9.8 million in funds received as “reimbursement for the costs of conducting investigations and audits and for monitoring compliance plans” as authorized by section 1128C(b) of the Social Security Act, 42 U.S.C. § 1320a-7c(b). 7 The Elder Justice Initiative, managed by the Civil Division, is included in the Civil Division figures. 8 Amounts only represent those that are provided by statute, and do not include other mandatory sources or discretionary appropriated sources provided through Departments’ annual appropriations. 6 7 Overall Recoveries During this fiscal year, the Federal Government won or negotiated over $1.9 billion in judgments and settlements, and attained additional administrative impositions in health care fraud cases and proceedings. As a result of these efforts, as well as those of preceding years, approximately $2.4 billion was returned to the Federal Government or private persons. Of this $2.4 billion, the Medicare Trust Funds received transfers of approximately $1.6 billion during this period; and another $135.9 million in Federal Medicaid money was transferred to the Treasury separately as a result of these efforts.9 In addition to these enforcement actions, numerous audits, evaluations and other coordinated efforts yielded recoveries of overpaid funds, and prompted changes in federal health care programs that reduce vulnerability to fraud. The return on investment (ROI) for the HCFAC program over the last three years (2013-2015) is $6.10 returned for every $1.00 expended. Because the annual ROI can vary from year to year depending on the number and type of cases that are settled or adjudicated during that year, DOJ and HHS use a three-year rolling average ROI for results contained in the report. Additional information on how the ROI is calculated can be found in the Appendix. Health Care Fraud Prevention and Enforcement Action Team (HEAT) The Attorney General and the Secretary maintain regular consultation at both senior and staff levels to accomplish the goals of the HCFAC Program. On May 20, 2009, Attorney General Holder and Secretary Sebelius announced the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a new effort with increased tools and resources, and a sustained focus by senior level leadership to enhance collaboration between the Departments of Health and Human Services and Justice. With the creation of the new HEAT effort, DOJ and HHS pledged a Cabinet-level commitment to prevent and prosecute health care fraud. HEAT, which is jointly led by the Deputy Attorney General and HHS Deputy Secretary, is comprised of top level law enforcement agents, prosecutors, attorneys, auditors, evaluators, and other staff from DOJ and HHS and their operating divisions, and is dedicated to joint efforts across government to both prevent fraud and enforce current anti-fraud laws around the country. The Medicare Fraud Strike Force teams are a key component of HEAT. The mission of HEAT is: • To marshal significant resources across government to prevent waste, fraud and abuse in the Medicare and Medicaid programs and crack down on the fraud perpetrators who are abusing the system and costing us all billions of dollars. • To reduce health care costs and improve the quality of care by ridding the system of perpetrators who are preying on Medicare and Medicaid beneficiaries. 9 Note that some of the judgments, settlements, and administrative actions that occurred in FY 2015 will result in transfers in future years, just as some of the transfers in FY 2015 are attributable to actions from prior years. 8 • To highlight best practices by providers and public sector employees who are dedicated to ending waste, fraud, and abuse in Medicare. • To build upon existing partnerships between DOJ and HHS, such as our Medicare Fraud Strike Force Teams, to reduce fraud and recover taxpayer dollars. Since its creation in May 2009, HEAT has focused on key areas for coordination and improvement. HEAT members are working to identify new enforcement initiatives and areas for increased oversight and prevention to increase efficiency in areas such as pharmaceutical and device investigations. DOJ and HHS have expanded data sharing and improved information sharing procedures in order to get critical data and information into the hands of law enforcement to track patterns of fraud and abuse and increase efficiency in investigating and prosecuting complex health care fraud cases. The departments established a cross-government health care fraud data intelligence sharing workgroup to share fraud trends, new initiatives, ideas, and success stories to improve awareness across of issues relating to health care fraud. Both departments also have developed training programs to prevent honest mistakes and help stop potential fraud before it happens. This includes CMS compliance training for providers, ongoing meetings at U.S. Attorneys’ Offices (USAOs) with the public and private sector, and increased efforts by HHS to educate specific groups—including elderly and immigrant communities—to help protect them. In addition, DOJ conducts, with the support of HHS, a Medicare Fraud Strike Force training program designed to teach the Strike Force concept and case model to prosecutors, law enforcement agents, and administrative support teams. Healthcare Fraud Prevention Partnership (HFPP) The Healthcare Fraud Prevention Partnership (HFPP) is the groundbreaking public/private partnership between the Federal Government, State officials, law enforcement, private health insurance plans and associations, and healthcare anti-fraud associations. The purpose of the partnership is to exchange data and information between the partners to help improve capabilities to fight fraud, waste and abuse in the health care industry. Since its inception in 2012, the number of participants has increased to 45 public, private and state partner organizations. The Partnership has completed several studies associated with fraud, waste or abuse that have yielded successful results for participating partners. Studies have examined such subjects as “false store fronts” or “phantom providers” and top billing pharmacies. Additional studies are underway and the Partnership has established a Trusted Third Party (TTP) which conducts HFPP data exchanges, research, data consolidation and aggregation, reporting, and analysis. The TTP will not share the source of the data (i.e., which partner submitted what data) during an exchange in order to keep the identity of the data source confidential. HFPP is continuing to expand with new partners. The Partnership is a demonstrated example of effective departmental collaboration between HHS and DOJ, working together to create a strong partnership with the states and private payers to detect fraud, waste, and abuse. In FY 2015, the Partnership hosted its fifth Executive Board meeting. The meeting focused on developing a strategy to ensure the productivity of the Partnership and highlighted achievements and progress since the last meeting including data exchanges, information sharing, and partnership growth. 9 Medicare Fraud Strike Force The first Medicare Fraud Strike Force (Strike Force) was launched in March 2007 as part of the South Florida Initiative, a joint investigative and prosecutorial effort against Medicare fraud and abuse in South Florida. The Strike Force is comprised of interagency teams made up of investigators and prosecutors that focus on the worst offenders in regions with the highest known concentration of fraudulent activities. The Strike Force uses advanced data analysis techniques to identify aberrant billing levels in health care fraud “hot spots”—cities with high levels of billing fraud—and target suspicious billing patterns, as well as emerging schemes and schemes that migrate from one community to another. Based on the success of these efforts and increased appropriated funding for the HCFAC program from Congress and the Administration, DOJ and HHS expanded Strike Force operations to a total of nine areas in the United States—Miami, Florida; Los Angeles, California; Detroit, Michigan; Southern Texas; Brooklyn, New York; Southern Louisiana; Tampa, Florida; Chicago, Illinois; and Dallas, Texas. Each Medicare Fraud Strike Force team brings the investigative and analytical resources of the FBI and HHS-OIG and the prosecutorial resources of the Criminal Division’s Fraud Section and the USAOs to analyze data obtained from CMS and bring cases in federal district court. Strike Force accomplishments in the areas noted above and USAO accomplishments in their districts during FY 2015 include10: • 200 indictments, informations and complaints involving charges filed against 391 defendants who allegedly collectively billed the Medicare program approximately $1.4 billion; • 314 guilty pleas negotiated and 28 jury trials litigated, with guilty verdicts against 48 defendants; and • Imprisonment for 263 defendants sentenced during the fiscal year, averaging more than 56 months of incarceration. In the eight and a half years since its inception, Strike Force prosecutors filed more than 1,164 cases charging more than 2,536 defendants who collectively billed the Medicare program more than $8 billion; 1,781 defendants pleaded guilty and 243 others were convicted in jury trials; and 1,477 defendants were sentenced to imprisonment for an average term of approximately 49 months.11 Medicare payment trends demonstrate the positive impact of Strike Force enforcement and prevention efforts. For example, Medicare payments for home health care increased from 2006 until 2010. In 2009, CMS changed Medicare’s Home Health Agency (HHA) outlier coverage policy, following federal enforcement actions initiated by the HEAT Strike Force case U.S. v. Zambrana in Miami and HHS-OIG reports regarding home health outlier payments. As reflected 10 The accomplishments figures presented in the bullets include all reported Strike Force cases handled by DOJ Criminal Division attorneys and AUSAs in the respective USAOs during FY 2015. 11 These statistics are for the period of May 7, 2007 through September 30, 2015. 10 on the chart below, since 2010, payments for HHAs in Miami decreased by $100 million per quarter since the peak in 2009, and continue to decline. In Dallas and Detroit, payments for HHAs are down by over $40 million and $25 million per quarter, respectively, since 2010. This may suggest that the home health fraud convictions not only eliminated some of the bad actors but also deterred other fraudsters from exploiting the outlier coverage policy. We have seen similar patterns of decreased Medicare payments for Durable Medical Equipment (DME) and community mental health services (CMHC) following concentrated law enforcement initiatives and administrative fraud prevention efforts. Medicare Payments for CMHC, DME, and HHA Services, Calendar Years 2006-2015 $275 CMHC-National Millions $250 HHA-Miami area $225 DME-Miami area $200 HHA-Detroit area $175 HHA Dallas area $150 $125 $100 $75 $50 $25 $0 For examples of successful Strike Force cases initiated or concluded during FY 2015, please see “Highlights of Successful Criminal and Civil Investigations” beginning on p. 12. 11 Highlights of Successful Criminal and Civil Investigations Our respective Departments successfully pursued Medicare Fraud Strike Force matters, as well as other criminal and civil investigations in a wide range of areas. Cases are organized by type and presented in chronological order. Strike Force cases are denoted by (SF) in the lead sentence. Ambulance and Transportation Services In November 2014, the co-owner of Brotherly Love, a Philadelphia, Pennsylvania ambulance company, was sentenced to 5 years and 4 months of incarceration and was ordered to pay more than $2 million in restitution after pleading guilty to health care fraud and the anti-kickback statute (AKS) charges. The investigation revealed that the co-owner and her co-conspirators transported by ambulance patients who could walk; transported patients in personally owned vehicles, but billed as if the patients were transported by ambulance; used patient information to bill as if the patients had been transported by ambulance when, in fact, the patients actually transported themselves; and paid patients to be transported by Brotherly Love. In May 2015, five Orange County California ambulance companies in San Diego, California agreed to pay a total of more than $11.5 million to settle civil False Claims Act (FCA) allegations that they engaged in so-called “swapping” kickback schemes by providing deeply discounted—and often below cost—ambulance services to hospitals and/or skilled nursing facilities (SNFs) in exchange for exclusive rights to the facilities’ more lucrative Medicare patient referrals in violation of the AKS. The government alleged that the arrangements resulted in false claims for Medicare Part B transports, which in essence subsidized the discounted trips. The settling defendants were Pacific Ambulance, Inc., Bowers Companies, Inc., Care Ambulance Service, Inc., Balboa Ambulance Service, Inc., and E.R. Ambulance, Inc. (SF) In August 2015, the owner, operators, and managers of ProMed Medical Transportation, an ambulance transportation company in the greater Los Angeles area, were convicted after trial for their roles in a $2.4 million Medicare fraud scheme. The evidence at trial demonstrated that the defendants conspired to bill Medicare for ambulance transportation services for individuals whom the defendants knew did not need such services. The defendants also instructed emergency medical technicians who worked at ProMed to conceal the true medical conditions of patients they were transporting by altering requisite paperwork and creating fraudulent documents to justify the transportation services. (SF) In June 2015, a general manager and a dispatch supervisor of Mauran Ambulance Inc., an ambulance company in San Fernando, California, were indicted for their roles in a $28 million Medicare fraud scheme. The defendants allegedly billed Medicare for medically unnecessary ambulance transportation services, which primarily were to and from dialysis treatments. In their respective roles at Mauran, the defendants instructed emergency medical technicians who worked at Mauran to conceal the true medical condition of patients they were transporting by altering paperwork and creating false reasons to justify Mauran’s ambulance transportation services. A former administrator of a dialysis clinic was also indicted for receiving cash kickbacks from Mauran’s general manager in exchange for patient referrals. 12 Clinics In FY 2015, DaVita Healthcare Partners, Inc., the nation’s largest provider of dialysis services, agreed to pay a total of $800 million to settle allegations made in two civil FCA actions. In October 2014, DaVita agreed to pay $350 million to settle civil FCA allegations that it paid kickbacks to induce the referral of patients to its dialysis clinics. The government alleged that DaVita offered physicians lucrative opportunities to acquire and/or sell an interest in DaVita dialysis clinics to which their patients would be referred for treatment and then prevented the physicians from referring their patients to other dialysis providers through a series of noncompete and non-disparagement agreements with the physicians. In June 2015, DaVita paid an additional $450 million to settle civil FCA allegations pursued by two whistleblowers that it created unnecessary waste in administering the drugs Zemplar and Venofer to dialysis patients, and then billed federal health care programs for such avoidable waste. (SF) In October 2014, two owners of several Brooklyn, NY medical clinics pled guilty to health care fraud conspiracy and falsification of records in the Eastern District of New York. The medical director of one clinic pled guilty to health care fraud conspiracy in March 2015. The defendants owned and operated a series of medical clinics that were used to submit more than $14.3 million in Medicare claims, of which $5.3 million was paid. The indictment alleged that the majority of the claims were fraudulent because they were for services such as vitamin infusions, physical and occupational therapy, and diagnostic tests that were medically unnecessary, not provided, or otherwise not reimbursable. The defendants also allegedly laundered the proceeds of the fraudulent scheme and falsified documents, which they then provided to Medicare auditors and the FBI in order to conceal the fraudulent scheme. (SF) In October 2014, an occupational therapist pled guilty in the Eastern District of New York to health care fraud conspiracy for his role in a scheme that involved the payment of cash kickbacks to elderly beneficiaries who received massages and light group exercises that were billed to Medicare and Medicaid as individual one-on-one occupational therapy and other occupational therapy services. As part of the scheme, the defendant, who was a full-time therapist for the New York Board of Education, signed false and fabricated patient charts and billing records for therapy that was not actually provided. As part of the plea, the defendant agreed to restitution and forfeiture of $1.6 million. Between February 2008 and February 2011, the defendant was the seventh-highest biller of occupational therapy in the country. (SF) In January 2015, two physician owners of Spectrum Care P.A., a Houston community mental health clinic, were sentenced to 148 months and 120 months, respectively, for their roles in a $97 million Medicare fraud scheme. The physician defendants were convicted, along with three co-defendants—a group home owner, a physician assistant, and an office manager—of health care fraud conspiracy and substantive counts of health care fraud following a five-week jury trial. The evidence at trial showed that the physician defendants signed admission documents and progress notes certifying that Medicare beneficiaries qualified for partial hospitalization services, when they did not. The evidence also showed that the physician defendants paid kickbacks to group home operators and patient recruiters, including their codefendants, in exchange for the referral of beneficiaries. The group home owner was sentenced to 54 months’ imprisonment, the office manager was sentenced to 60 months’ imprisonment, and the physician assistant was sentenced to 68 months’ imprisonment. 13 In January 2015, six co-conspirators in Arlington, Texas were sentenced for submitting over $5 million in false health insurance claims to Blue Cross Blue Shield of Texas (BCBS), the Federal Employees Health Benefits Program, and other insurers for services not rendered at a chiropractic clinic. The co-conspirators included a licensed chiropractor and occupational therapist who allowed the use of their provider numbers to fraudulently bill insurers for services not provided. To further the scheme, a union representative for a Texas automotive parts manufacturer actively recruited employees to go to the co-conspirators’ chiropractic clinic. The union representative and recruited employees received illegal kickback for these referrals. The sentences imposed in this case ranged from 6 months imprisonment to 156 months imprisonment, and restitution from $1.3 to $2.4 million. (SF) In February 2015, the co-owners of BONB LLC, aka Bioscan, were sentenced to 57 and 37 months’ imprisonment in the Middle District of Florida for their roles in a health care fraud and money laundering scheme. Bioscan was a shell company the defendants used to facilitate a multi-million dollar fraud scheme executed through several purported medical clinics. As part of their guilty pleas, the defendants admitted that their co-conspirators submitted $12 million in fraudulent claims to Medicare, including claims resulting from illegal kickback arrangements and claims for radiology, audiology, neurology, and cardiology services that were never rendered. The defendants admitted to attempting to conceal the proceeds of the fraudulent claims by transferring funds through bank accounts for Bioscan and other entities. In addition to the prison sentences, one defendant agreed to forfeit a $60,000 platinum and diamond ring he purchased with health care fraud proceeds. In July 2015, the operator of a sham clinic in the Central District of California was sentenced after being convicted at trial to 15 years in federal prison for his role in a $20 million scheme to defraud Medicare and Medicaid by fraudulently prescribing expensive anti-psychotic medications, selling these drugs on the black market, and then redistributing them to pharmacies, where the drugs would be subject to new claims made to Medicare and Medicaid as though they were new bottles of drugs. Employees of sham clinic generated thousands of prescriptions for identity theft victims—such as elderly Vietnamese beneficiaries of Medicare and Medicaid, military veterans who were recruited from drug rehab programs, and denizens of Skid Row. This case was the first in the nation involving an organized scheme to defraud government health care programs through fraudulent claims for expensive anti-psychotic medications. Community Mental Health Centers (SF) In December 2014, a certified nursing assistant in Miami, Florida was sentenced to 12 years and six months in prison and ordered to pay $18.2 million in joint and several restitution after being convicted by a jury on charges of relating to health care fraud. American Therapeutic Corporation (ATC) operated several purported partial hospitalization programs (PHP) throughout Florida. Evidence at trial demonstrated that the defendant received thousands of dollars a month in cash kickbacks in exchange for referring Medicare patients to ATC. The evidence also demonstrated that the beneficiaries he sent to ATC did not need, qualify for, or receive PHP treatment. Nevertheless, ATC submitted false claims to Medicare for PHP services purportedly provided to each of these patients. To date, 30 defendants, including the owners of 14 ATC, have previously pleaded guilty or been convicted at trial on charges related to the ATC scheme, which resulted in more than $200 million in fraudulent Medicare billings. (SF) In January 2015, two physicians in Houston, Texas were sentenced to a combined 22 years and 4 months in prison and ordered to pay a combined $8 million in restitution after being convicted by a jury on charges relating to health care fraud. The two physicians owned a community mental health center (CMHC) that purportedly provided PHP services to Medicare beneficiaries. Evidence at trial showed that the two physicians paid kickbacks to group care home operators and patient recruiters in exchange for bringing ineligible Medicare beneficiaries to their CMHC. They then signed admission documents and progress notes certifying that the beneficiaries qualified for PHP services when, in fact, they did not qualify for or need these services and/or the actual services were not performed. The CMHC billed Medicare approximately $97 million for these fraudulent services. One of the group home owners was sentenced to 4-and-a-half years in prison and ordered to pay $1.8 million in restitution. (SF) In April 2015, a licensed mental health counselor in Miami, Florida was sentenced to 4 years in prison and ordered to pay $13.6 million in joint and several restitution after pleading guilty to conspiracy to commit health care fraud. The defendant worked as a therapist for Health Care Solutions Network, Inc., in Florida (HCSN-FL). He admitted that he provided intensive therapy to mental health patients who were ineligible to receive the therapy or could not benefit from partial hospitalization program (PHP) services, including patients suffering from dementia, mental retardation, and Alzheimer’s disease. He signed fabricated PHP therapy notes and other medical records, which were used to support the false claims to Medicare and Medicaid. During his employment, the defendant and his co-conspirators submitted approximately $31 million in false claims to Medicare and Florida Medicaid programs. Device Companies In December 2014, OtisMed Corp. of Newark, New Jersey was ordered to pay $34.4 million in fines and $5.1 million in forfeiture after pleading guilty to distributing, with the intent to defraud and mislead, adulterated medical devices into interstate commerce in violation of the Food, Drug, and Cosmetic Act. OtisMed submitted a pre-market notification to the Food and Drug Administration (FDA) seeking clearance to market the OtisKnee in October 2008. In September 2009, the FDA sent OtisMed a notice that its submission was denied, stating that the company failed to demonstrate that the OtisKnee was as safe and effective as other legally marketed devices. Despite his awareness of the letter and advice from legal counsel that it would be unlawful to continue distributing the OtisKnee, the Chief Executive Officer ordered employees at OtisMed to distribute more than 200 OtisKnee devices to surgeons throughout the United States. The CEO and others also concealed the shipments from the FDA, and did not disclose that distributing OtisKnee was prohibited. The CEO pleaded guilty to introducing adulterated medical devices in interstate commerce and was sentenced on June 29, 2015 to 24 months in prison. Apart from the criminal plea, OtisMed agreed to pay a $41.2 million settlement to resolve its civil FCA liability arising from the marketing and distribution of the OtisKnee, and to be excluded from participation in federal health care programs for 20 years. In February 2015, medical device manufacturer ev3 Inc., formerly known as Fox Hollow Technologies Inc., agreed to pay $1.3 million to resolve civil FCA allegations that it caused 15 certain hospitals to submit false claims to Medicare for unnecessary inpatient admissions for procedures involving its atherectory device. Atherectomy is a minimally-invasive surgical procedure that uses a small cutting device to remove atherosclerosis, or hardening of the arteries, from large blood vessels within the body. The government alleged that to increase hospital purchases of its atherectomy devices, Fox Hollow advised hospitals that they should bill atherectomy procedures as more expensive inpatient claims, as opposed to less costly outpatient claims. As a result, certain hospitals allegedly claimed greater reimbursement than they were entitled to receive for procedures involving Fox Hollow’s devices. In April 2015, Medtronic plc and certain affiliated Medtronic companies agreed to pay $4.4 million to settle civil FCA allegations that they made false statements to the U.S. Department of Veterans Affairs and the U.S. Department of Defense regarding the country of origin of certain Medtronic products sold to the United States. The Trade Agreements Act of 1979 (TAA) generally requires companies selling products to the United States to manufacture them in the United States or in another designated country. The settlement resolved allegations that Medtronic sold to the United States products manufactured in China and Malaysia; under the TAA, the Government is precluded from acquiring the products at issue from those countries. The specific Medtronic products included anchoring sleeves sold with cardiac leads and used to secure the leads to patients, certain instruments and devices used in spine surgeries, and a handheld patient assistant used with a wireless cardiac device. In July 2015, NuVasive Inc. of San Diego, California, agreed to pay $13.5 million to resolve allegations that the company promoted its CoRoent System for surgical uses that were not approved or cleared by the FDA and paid kickbacks to induce physicians to use its CoRoent System. The government alleged that, between 2008 and 2013, NuVasive promoted its CoRoent System for certain surgical uses, including for use in treating two complex spine deformities: severe scoliosis and severe spondylolisthesis. Because these specific uses were not approved or cleared by the FDA, the claims submitted to Medicare and Medicaid from physicians and hospitals for these spine surgeries were not eligible for reimbursement. The government also alleged that NuVasive knowingly offered and paid illegal remuneration to certain physicians to induce them to use the CoRoent System in spine fusion surgeries, in violation of the Federal antikickback statute. The alleged illegal remuneration consisted of promotional speaker fees, honoraria, and expenses relating to physicians’ attendance at events sponsored by a group that was allegedly created, funded, and operated by NuVasive. Drug Companies In January 2015, Daiichi Sankyo Inc., a global pharmaceutical company, agreed to pay $39 million to resolve civil FCA allegations that it paid kickbacks to induce physicians to prescribe Daiichi drugs, including Azor, Benicar, Tribenzor and Welchol. The alleged kickbacks took the form of honoraria payments, lavish meals, and other remuneration to physicians who participated, or supposedly participated, in speaker programs. Daiichi allegedly made payments to physicians even when physicians took turns “speaking” on duplicative topics over Daiichipaid dinners, the recipient spoke only to members of his or her own staff in his or her own office, 16 or the associated dinner was so lavish that its cost exceeded Daiichi’s own internal cost limitation of $140 per person. In February and May 2015, Medco Health Solutions, Inc., a wholly-owned subsidiary of the pharmacy benefit manager Express Scripts Holding Company, and AstraZeneca, a pharmaceutical manufacturer, agreed to pay a total of $15.8 million to settle civil FCA allegations of a kick-back scheme involving marketing and selling pharmaceutical products. The government alleged that AstraZeneca paid kickbacks to Medco in exchange for identifying Nexium as the “sole and exclusive” proton pump inhibitor on certain of Medco’s prescription drug lists known as formularies. The alleged remuneration from AstraZeneca took the form of price concessions on certain AstraZeneca drugs other than Nexium, namely on Prilosec, Toprol XL, and Plendil. In July 2015, drug manufacturers AstraZeneca LP and Cephalon, Inc. agreed to pay a total of $54 million to settle civil FCA allegations that they knowingly underpaid rebates owed under the Medicaid Drug Rebate Program (MDRP). Pursuant to the MDRP, drug manufacturers must pay quarterly rebates to state Medicaid programs in exchange for Medicaid’s coverage of the manufacturers’ drugs. The rebates are based, in part, on the Average Manufacturer Prices (AMPs) that the manufacturers report to the government for each of their covered drugs. The settlements with AstraZeneca and Cephalon resolved allegations that they underreported AMPs for a number of their drugs by improperly reducing the reported AMPs for service fees they paid to wholesalers. As a result, the government contended that AstraZeneca and Cephalon underpaid quarterly rebates owed to the states and caused the United States to be overcharged for its payments to the states for the Medicaid program. Durable Medical Equipment (DME) In December 2014, a medical supplies company owner was sentenced in Baton Rouge, Louisiana to 156 months imprisonment for submitting hundreds of false and fraudulent claims to Medicare for medical devices over a two year period. For instance, he submitted claims for “brace kits,” regardless of whether any of the Medicare beneficiaries named in the claims needed or had prescriptions for the items, submitted claims for custom-fabricated devices which were never provided, and submitted numerous claims for expensive replacement power wheelchairs that he falsely claimed had been damaged or destroyed by a hurricane. The owner was ordered to make restitution to the Medicare program in the amount of $1.2 million, to forfeit the proceeds of his criminal activity up to an additional $1.2 million, and to serve a two-year term of supervised release. (SF) In February 2015 and May 2015, two individuals pled guilty to health care fraud conspiracy for their roles in a $13 million long-running scheme to submit false claims for durable medical equipment to a government-sponsored organization for managed care in New York. The scheme involved the defendants using information for approved, in-network equipment providers to obtain approvals that were then used to secure payments on behalf of sham companies that the defendants set up. Companies believed to have been involved in the scheme submitted fraudulent claims to the managed care organization in amounts over $13 million since 2008. In 17 September 2015, one of the defendants was sentenced to 21 months in jail and ordered to pay over $337,000 in forfeiture and the same amount in restitution. (SF) In March 2015, an owner of Colonial Medical Supply, a durable medical equipment company in Los Angeles, was convicted after a jury trial for his role in a $3.3 million Medicare fraud scheme. The evidence at trial established that the defendant paid cash kickbacks to medical clinics for fraudulent prescriptions for durable medical equipment, such as expensive power wheel chairs, which the patients did not need. The defendant then used these prescriptions to bill Medicare for the medically unnecessary equipment. In May 2015, the defendant was sentenced to 84 months’ imprisonment. (SF) In March 2015, an owner of Ezcor-9000, Inc., a durable medical equipment company in Valencia, California, was convicted after an eight-day jury trial for her role in a $3.5 million Medicare fraud scheme. The evidence at trial established that the defendant paid illegal kickbacks to patient recruiters in exchange for patient referrals. The evidence also showed that the defendant paid kickbacks to physicians for fraudulent prescriptions—primarily for medically unnecessary, but expensive, power wheelchairs—that she then used to support her fraudulent bills to Medicare. In June 2015, the defendant was sentenced to 97 months in prison. In May 2015, DME suppliers Orbit Medical Inc. and its partial successor, Rehab Medical Inc., agreed to pay $7.5 million to settle civil FCA allegations that Orbit submitted false claims to federal health care programs for power wheelchairs and accessories. The settlement resolved allegations that Orbit sales representatives knowingly altered physician prescriptions and supporting documentation to get Orbit’s power wheelchair and accessory claims paid by Medicare, the Federal Employees Health Benefits Plan and the Defense Health Agency. In particular, the government alleged that Orbit sales representatives changed or added dates to physician prescriptions and chart notes to falsely document that the prescription was sent to the supplier within 45 days of the face-to-face beneficiary exam; changed the physician prescription, chart notes, and other documentation to falsely establish medical necessity for the power wheelchair or accessory; and added facsimile stamps to supporting documentation to make it appear as though the physician’s office had sent the documents to Orbit. In May 2015, a DME supplier in Austin, Texas was sentenced to 36 months imprisonment and 3 years supervised release, and ordered to pay $846,171 in restitution for submitting fraudulent bills through the Department of Labor for items never sent to patients. The supplier was billing primarily for electrode pads. The false claims were for DME supplies for U.S. Postal employees. The scheme ran for at least three years and involved billings to the Government of over $1 million. The supplier paid the restitution/forfeiture up-front, and the forfeiture included cash and a 2014 BMW. (SF) In May 2015, a registered nurse and owner of a DME company in Los Angeles, California was sentenced to 4 years in prison and ordered to pay $4.3 million in joint and several restitution after being convicted of health care fraud and laundering of monetary instruments. According to the investigation, the nurse/owner and her co-conspirators used cash and checks to pay illegal kickbacks to recruit Medicare beneficiaries for power wheelchairs and other DME, to which the beneficiaries did not have a legitimate medical need. She and her co-conspirators also paid 18 illegal kickbacks to a physician in exchange for writing false prescriptions and documents for the DME, which was then used to fraudulently bill Medicare. Electronic Health Records In June 2015, the Chief Financial Officer (CFO) of Shelby Regional Medical Center of Center, Texas, was sentenced to 1 year and 11 months in jail and ordered to pay $4.4 million in restitution after pleading guilty to making a false statement. As CFO he oversaw the implementation of electronic health records (EHR) for the hospital and was responsible for attesting that the hospital’s EHR platform met meaningful use requirements in order to qualify for incentive payments under Medicare’s EHR Incentive Program. During FY 2012, Shelby Regional did not meaningfully use the EHR platform, despite an attestation from the CFO that it did. He falsely certified to CMS that Shelby Regional met the meaningful use requirements, even though he was fully aware that Shelby Regional used the EHR system sparingly and did not meet the criteria for incentives. As a result of his conduct, Shelby Regional received a $785,655 EHR incentive payment from CMS in FY 2012. Health Maintenance Organization In May 2015, an employee of several organizations in Miami, Florida, including Florida Healthcare Plus, Inc. (FHCP), was sentenced to 2 years in prison and ordered to pay $16 million in joint and several restitution after pleading guilty to conspiracy to commit health care fraud and wire fraud. FHCP was a health maintenance organization in Florida. According to the investigation, the defendant submitted fraudulent Medicare and Medicaid enrollment applications for beneficiaries, which claimed that the beneficiaries resided in Florida, when they actually resided in Nicaragua and the Dominican Republic. In addition to the defendant, five other individuals connected to this health care fraud scheme were sentenced in June 2015 to a combined 10 years and 3 months in prison and ordered to pay $16 million in joint and several restitution. Home Health Providers (SF) In October 2014, the director of two Miami-based businesses that purportedly provided home health services to Medicare beneficiaries was sentenced to 10 years and 1 month in prison and ordered to pay $18.6 million in restitution after pleading guilty to conspiracy to commit health care fraud and payment of kickbacks in connection with a federal healthcare program. The investigation related that the director paid co-conspirators thousands of dollars in kickbacks in exchange for referring Medicare beneficiaries and also paid kickbacks to the owner of a medical clinic in exchange for home health service prescriptions. In November 2014, CareAll Management LLC, a Nashville, Tennessee home health provider, agreed to pay $25 million to settle civil FCA allegations that it submitted false and upcoded home health care billings to the Medicare and Medicaid programs. The settlement resolves allegations that CareAll overstated the severity of patients’ conditions to increase billings and billed for services that were not medically necessary and rendered to patients who were not homebound. 19 (SF) In November 2014, an administrator and owner at two Miami-based Florida businesses which purportedly provided home health care and physical therapy services to Medicare beneficiaries was sentenced to 6 years and 8 months of incarceration and ordered to pay $45 million in restitution after pleading guilty to conspiracy to commit health care fraud. The investigation revealed that administrator/owner and her co-conspirators paid kickbacks to patient recruiters for the referral of patients and for the provision of medically unnecessary or sham prescriptions, plans of care, and certifications for therapy and home health services. The businesses submitted approximately $74 million in fraudulent claims for home health services to Medicare and were paid approximately $45 million on those claims. Another co-conspirator was previously sentenced to 5 years in prison and ordered to pay $27 million in restitution. (SF) In January 2015, the owner of Nation’s Best Home Health, a Miami home health care agency, was sentenced to 106 months’ imprisonment for his role in a $35 million Medicare fraud scheme. According to his plea agreement, the defendant and his co-conspirators operated Nation’s Best for the purpose of billing the Medicare program for, among other things, physical therapy and other home health care services that were not medically necessary or not provided. The co-conspirators paid kickbacks to patient recruiters in exchange for patient referrals to Nation’s Best, as well as prescriptions, plans of care, and certifications for medically unnecessary home health care services, all of which were used to fraudulently bill the Medicare program for unnecessary home health care services. In January 2015, an owner and operator of Norfolk, Virginia based Community Personal Care home health care services was sentenced to 63 months in prison, followed by three years of supervised release, and his wife who was the company’s office administrator and executive assistant was sentenced to 25 months in prison, followed by three years of supervised release for their operation of a massive false billing scheme. During a three week trial, the government proved that 7,800 fraudulent claims were submitted to the Virginia Medicaid program, falsely representing that personal care and respite care services had been provided to 78 Medicaid recipients by Community Personal Care. To conceal the fraudulent payments, the defendants directed employees to alter the company’s office records, including home health aide time sheets. Both defendants were ordered together to pay $1.5 million in restitution. (SF) Between January 2015 and May 2015, five patient recruiters pled guilty for their roles in a $4.5 million Medicare fraud scheme involving Joystar Home Health Services, LLC, a home health care company located in Richmond, Texas. According to court documents, each of the defendants agreed with Joystar’s owner and director of nursing to refer Medicare beneficiaries to Joystar in exchange for kickbacks. Joystar then billed Medicare for home health care services that were medically unnecessary or not provided. The co-conspirators in the fraud also paid beneficiaries to participate in the scheme and paid physicians to authorize medically unnecessary services. Previously, the owner of Joystar was sentenced to five years’ imprisonment following his guilty plea to structuring over $1.8 million to conceal the funds he used to pay kickbacks to patient recruiters and physicians. Joystar’s director of nursing, who pled guilty to health care fraud and structuring, is awaiting sentencing. In February 2015, ResCare Iowa Inc., a home health service provider, agreed to pay $5.6 million to settle civil FCA allegations that it submitted false home health care billings to Medicare and 20 Medicaid. Medicare and the state of Iowa’s Medicaid program require an independent physician to certify that home health care services are medically necessary and to order the specific type and amount of health care services to be provided by the home health agency (HHA). The settlement resolves allegations that ResCare Iowa billed the government for services provided to Medicare and Medicaid patients in Iowa without documenting compliance with these requirements. (SF) In April 2015, the Miami, Florida owner of a business that purportedly provided home health care and physical therapy services to Medicare beneficiaries was sentenced to 9 years and 5 months in prison and ordered to pay $21 million in restitution after pleading guilty to conspiracy to commit health care fraud. According to the investigation, the owner and his coconspirators paid patient recruiters to place beneficiaries at the business. The recruiters then sent the beneficiaries to doctors to obtain prescriptions for home health services that were not medically necessary and were not provided. The man and his co-conspirators caused patient documentation to be falsified in order to bill Medicare approximately $32 million for the fraudulent services. He was indicted in May 2013 and was an HHS-OIG Most Wanted Fugitive living in Cuba until he returned to the United States in September 2014 and was arrested. (SF) Between April and July 2015, three defendants were sentenced in the Eastern District of Michigan to a combined 20 years and 8 months in jail and ordered to pay more than $22 million in joint and several restitution after being convicted of conspiracy to commit health care fraud and other charges. Two of the defendants jointly operated several home health agencies in Michigan, while the third, who was a daughter of one of the others, co-operated a home health agency. According to the investigation, the three defendants, along with their co-conspirators, paid kickbacks and bribes to recruiters and others for beneficiary information that would be used to falsely bill Medicare millions for home health services that were medically unnecessary and not performed. Another co-conspirator, who jointly operated several of the home health care facilities, was indicted in September 2012, but investigators believe that he fled the country. (SF) In April 2015, the owner of AA Advanced Home Health Inc., a Miami home health care agency, was sentenced to 113 months’ imprisonment for his role in a $32 million home health care fraud scheme. As part of his guilty plea, the defendant admitted that he and his coconspirators paid kickbacks to patient recruiters in exchange for patient referrals and billed Medicare for physical therapy and other home health care services that were medically unnecessary or not provided. (SF) In April 2015, the owner of multiple home health care agencies in the Detroit area was sentenced to 120 months’ imprisonment after being convicted in an eight-week jury trial for his role in a $29.1 million Medicare fraud scheme. The wide-ranging scheme involved approximately 30 purported medical clinics in the Detroit area that paid kickbacks to patient recruiters and billed Medicare for home health services that were not provided. Eight codefendants previously pled guilty and two co-defendants were convicted at trial. One of the codefendants who owned two home health care companies involved in the scheme pled guilty and was sentenced to 80 months’ imprisonment in July 2015. That defendant also received proceeds of the home health care fraud through bank accounts he controlled, withdrew substantial sums for his personal use, failed to report these proceeds on his individual federal income tax returns, and pled guilty to filing a false tax return. 21 (SF) In May 2015, the owner of a Miami-based business that purportedly provided home health and therapy services to Medicare beneficiaries was sentenced to 10 years in prison and ordered to pay $13 million in joint and several restitution after pleading guilty to conspiracy to commit health care fraud. The owner admitted that he and his co-conspirators billed Medicare for, among other things, expensive physical therapy and home health care services that were not medically necessary and/or were not provided. The owner and his co-conspirators also paid kickbacks and bribes to other co-conspirators in doctors' offices and clinics in exchange for providing home health and therapy prescriptions. From approximately January 2009 to November 2014, Longcare submitted more than $13 million in claims to Medicare for home health services that were not necessary and/or were not provided. Eight defendants who participated in the fraud scheme were previously sentenced to a combined 53 years and 7 months in jail. In June 2015, a group of home health care companies—Friendship Home Healthcare, Inc., Friendship Home Health, Inc., Angel Private Duty and Home Health, and Friendship Home Health Agency, LLC. (collectively “Friendship”)—and their owner agreed to pay $6.5 million to resolve civil FCA allegations that they improperly billed federal health care programs for home health services. The settlement resolves allegations that Friendship submitted false claims for private duty nursing services that were furnished or supervised by a woman who was excluded from billing federal and state health care programs and that Friendship submitted required forms containing the forged signature of Friendship’s Director of Nursing. (SF) In July 2015, an owner and controller of multiple home health care agencies in the Detroit area and a co-owner were convicted at trial for their roles in a $33 million home health care fraud scheme. One co-defendant, a patient recruiter, previously pled guilty for her role in the scheme. According to the evidence at trial, patient recruiters were paid kickbacks to bring Medicare beneficiaries into the scheme. In exchange for cash kickbacks and prescriptions for controlled substances, the beneficiaries signed forms and therapy visit sheets that were later falsified to indicate they received home health services that were never provided. Physicians employed by one of the defendants then purported to examine non-homebound Medicare beneficiaries for home health care services, signed false paperwork so they could be billed through four home health agencies, and provided the patients with narcotic prescriptions. Hospice Care In February 2015, for-profit hospice provider Good Shepherd Hospice Inc., whose main location is in Oklahoma City, and certain affiliated entities agreed to pay $4 million to resolve civil FCA allegations that they submitted false claims for hospice patients who were not terminally ill. The Medicare hospice benefit is available for patients who elect palliative treatment for a terminal illness and have a life expectancy of six months or less if their illness runs its normal course. The settlement resolved allegations that Good Shepherd knowingly submitted false claims for hospice care for patients who were not terminally ill by pressuring staff to meet admissions and census targets, paying bonuses to staff based on the number of patients enrolled, hiring medical directors based on their ability to refer patients, and failing to properly train staff on the hospice eligibility criteria. 22 In June 2015, Covenant Hospice Inc., a non-profit hospice service provider, agreed to pay $10 million to settle civil FCA allegations that it overbilled Medicare, TRICARE and Medicaid for hospice services. Hospice benefits are generally available only for patients who have a life expectancy of six months or less if their disease runs its normal course. Patients admitted to a hospice stop receiving care to cure their illnesses and instead receive medical care focused on providing them with relief from the symptoms, pain and stress of a terminal illness. The settlement resolved allegations that Covenant improperly submitted hospice claims for higherlevel inpatient care that should have been billed at lower-level routine home care. (SF) In June 2015, two physicians and three owners of hospice and home health care companies in the greater Detroit area were charged for their roles in a $58.3 million scheme to defraud Medicare by submitting claims for home health care and hospice services that were medically unnecessary or not provided. According to court documents, the owners of the home health care and hospice companies, two of whom are also registered physical therapists, paid physicians and patient recruiters kickbacks for referring patients, then billed Medicare for services that were medically unnecessary or never provided. The companies, located in Livonia, Michigan, were A Plus Hospice and Palliative Care, At Home Hospice, and At Home Network Inc., a home health care agency. The physicians who solicited and received kickbacks also submitted claims to Medicare for medically unnecessary physician services. Court documents also allege that one of those physicians used prescriptions for controlled substances to induce beneficiaries to allow At Home Network to bill Medicare for purportedly providing services to the beneficiaries. Hospitals and Health Systems In October 2014, Dignity Health, the fifth largest health system in the country formerly known as Catholic Healthcare West, agreed to pay $36.7 million to settle civil FCA allegations that 13 of its hospitals in California, Nevada, and Arizona knowingly submitted false claims to Medicare and TRICARE by admitting patients who could have been treated on a less costly, outpatient basis. Specifically, the government alleged that certain Dignity hospitals billed Medicare and TRICARE for inpatient care for certain patients who underwent elective cardiovascular procedures and elective, minimally-invasive kyphoplasty procedures and patients with certain common medical diagnoses where admission as an inpatient was medically unnecessary and appropriate care could have been provided in a less costly outpatient or observation setting. In December 2014, the owner/operator of a hospice agency in Greenwood, Mississippi was sentenced to 5 years and 10 months in prison and ordered to pay $7.9 million in restitution after pleading guilty to conspiracy to commit healthcare fraud. The investigation revealed that, from around March 2010 to February 2013, the owner/operator and her co-conspirators used the hospice to submit millions of dollars in fraudulent claims to Medicare, for which they were reimbursed more than $12.5 million. These false billings included claims for patients who were not eligible for hospice benefits because they were not terminally ill and claims based on medical records containing forged signatures of the beneficiaries, the hospice Medical director, and/or the beneficiaries’ attending physician. In addition, the defendant, through the hospice, submitted claims to Medicare based on patient referrals from physicians who, in actuality, never referred patients. Many of the patient names were obtained from a medical records clerk, who has been separately charged for accepting over $240,000 in kickbacks from the defendant. The defendant 23 used the funds obtained from Medicare to purchase more than $1.4 million in vehicles and property. In December 2014, five senior hospital administrators and five hospital physicians and a podiatrist in Illinois were charged with criminal violation of conspiracy to receive kickbacks and receiving kickbacks. In December 2014, two administrators pled guilty and the remaining administrators went to trial. After a seven-week trial, on March 19, 2015, the jury found each of the defendants guilty of the charges alleged. The Court sentenced one administrator to 54 months’ imprisonment and a $770,000 fine, another administrator was sentenced to 21 months’ imprisonment, and a third was sentenced to a term of imprisonment of 12 months and 1 day and to pay a fine of $25,000 on July 30, 2015. The Court has also entered joint and several orders of forfeiture against the administrators in the amount of $10.5 million and $8.5 million. Three doctors pled guilty and one has been sentenced to six months imprisonment, two went to trial and one was acquitted, the third doctor is set to go trial in 2016. In February 2015, Community Health Systems Professional Services Corporation (CHS), a nationwide hospital management company, and three of its affiliated New Mexico hospitals agreed to pay $75 million to settle civil FCA allegations that they made illegal donations to county governments that were used to fund the state share of Medicaid payments to the hospitals. Under a program discontinued in 2014, the federal government reimbursed New Mexico for approximately 75 percent of supplemental Medicaid expenditures in rural hospitals, and required that New Mexico’s 25 percent matching payments had to consist of state or county funds, and not donations from private hospitals. The government alleged that CHS knowingly made improper donations to Chaves, Luna, and San Miguel counties, which were then used by the counties, and subsequently the state, to obtain federal matching payments. The government alleged that CHS concealed the true nature of these donations, and as a result of its scheme, received supplemental Medicaid payments which were funded by the United States in the amount of three times CHS’ donations. In April 2015, The Medical Center of Central Georgia, Inc. (MCCG) agreed to pay $20 million to resolve civil FCA allegations that it submitted false claims to Medicare for medically unnecessary inpatient admissions, including zero-day stays, one-day stays, cardiac stays with a procedure, and cardiac stays without a procedure. Specifically, these services should have been billed as outpatient or observation services due to the absence of medical necessity for inpatient services. In April 2015, Citizens Medical Center, a county-owned hospital in Victoria, Texas, agreed to pay $21.7 million to settle civil FCA allegations that it engaged in improper financial relationships with referring physicians. The settlement resolved allegations that the hospital provided compensation to several cardiologists that exceeded the fair market value of their services and that the hospital paid bonuses to emergency room physicians that improperly took into account the value of their cardiology referrals in violation of the Stark Law. 24 In June 2015, Children’s Hospital in Washington, DC, Children’s National Medical Center Inc., (CNMC) and its affiliated entities agreed to pay $12.9 million to resolve civil FCA allegations that they submitted false cost reports and other applications to the components and contractors of HHS, as well as to Virginia and District of Columbia Medicaid programs. The settlement resolves allegations that CNMC misstated information regarding its available bed count and overhead costs on cost reports and applications that were used by HHS and Medicaid programs to calculate reimbursement rates to CNMC. In June 2015, Community Health Network (CHN), an Indiana-based non-profit health system, agreed to pay over $20 million to resolve allegations that it submitted false claims to the Medicare and Medicaid programs. CHN contracted with free-standing ambulatory surgery centers (ASCs) to provide outpatient surgical services to CHN patients. When billing Medicare and Medicaid, however, CHN allegedly represented that the surgery was performed in the outpatient department of CHN’s hospitals, rather than in an ASC. Based on this prohibited practice, CHN allegedly received a higher reimbursement from the Medicare and Medicaid programs than it was entitled. (SF) In July 2015, the former owner and chief executive officer, the chief operating officer, and the chief financial officer of Sacred Heart Hospital, a now-closed acute care facility in Chicago, were sentenced to 54 months, 21 months, and 12 months and a day in prison, respectively, for their roles in a Medicare and Medicaid kickback scheme. Following a seven-week trial, a jury convicted these defendants of conspiring to violate the AKS and of substantive AKS violations. The evidence at trial revealed that the defendants were involved in a conspiracy to pay physicians hundreds of thousands of dollars in illegal bribes and kickbacks to induce patient referrals to the hospital and to increase the patient census, which, in turn, increased hospital revenue. Five other defendants pled guilty in the case, including three physicians, a chief operating officer, and the vice president of geriatric services. Another physician defendant was found guilty of violating the AKS following a bench trial that ended in June 2015. One remaining defendant in the case, a physician, is scheduled for trial in February 2016. (SF) In August 2015, a jury in the Southern District of Florida returned guilty verdicts against a former medical director and three therapists of Health Care Solutions Network Inc., a defunct partial hospitalization program that purported to provide intensive psychiatric treatment to Medicare and Medicaid beneficiaries. The trial evidence showed that the former medical director routinely signed what he knew to be fabricated and altered medical records without reviewing the substance of the records and, in most instances, without ever meeting with the patients. The evidence at trial also demonstrated that the three therapists fabricated medical records to support Healthcare Solution Network’s false and fraudulent claims for reimbursement for intensive psychiatric services. In total, Healthcare Solutions Network submitted approximately $63.7 million in fraudulent claims to Medicare and Medicaid, which paid $28 million on those claims. Two co-defendants were each sentenced to six years’ imprisonment in February 2015, following their convictions in a separate November 2014 trial. 25 In September 2015, North Broward Hospital District, a special taxing district of the state of Florida that operates hospitals and other health care facilities, agreed to pay $69.5 million to settle civil FCA allegations that it engaged in improper financial relationships with referring physicians. The settlement resolved allegations that the hospital district provided compensation to nine employed physicians that exceeded the fair market value of their services in violation of the Stark Law. In September 2015, Columbus Regional Healthcare System (Columbus Regional) and a physician agreed to pay more than $25 million to settle civil FCA allegations that they submitted claims to federal health care programs that violated the Stark Law and that misrepresented the level of services they provided. The government alleged that Columbus Regional provided excessive salary and directorship payments to the physician that violated the Stark Law, submitted claims for services at higher levels than supported by the documentation, and submitted claims for radiation therapy at higher levels than the therapy that was provided. Under the settlement agreement, Columbus Regional agreed to pay $25 million, plus additional contingent payments not to exceed $10 million, for a maximum settlement amount of $35 million; the physician has agreed to pay $425,000. In September 2015, Adventist Health Care System, a non-profit healthcare organization that operates hospitals and other healthcare facilities in 10 states, agreed to pay $115 million to settle civil FCA allegations that they submitted false claims to Medicare and Medicaid. Adventist allegedly paid bonuses to its employed physicians based on the number of tests and procedures they ordered and billed Medicare for its employed physicians’ professional services using improper coding modifiers. Identity Theft In June 2015, an individual in Naples, Florida was sentenced to 6 years in prison and ordered to pay $351,358 in joint and several restitution after pleading guilty to charges relating to health care fraud, identity theft, and distribution of controlled substances. He admitted that he and his co-conspirators, including his brother, submitted claims for reimbursement from Medicare, Medicaid, and TRICARE for prescriptions that were not filled or provided to beneficiaries or recipients, including prescriptions for patients that had not been written or authorized by a licensed physician. The brother, who was a licensed pharmacist and owner of a pharmacy used to further the scheme, previously pleaded guilty to conspiracy to commit health care fraud and was sentenced to 2 years in prison in March 2014. In June 2015, a husband and wife were sentenced to a combined 30 years and 9 months of incarceration and ordered to pay over $1.2 million in joint and several restitution and forfeiture after being convicted of charges related to health care fraud. Evidence at trial showed that the two operated a sham clinic in Coral Gables, Florida, and employed unlicensed medical professionals to bill Medicare for HIV services that were never rendered. The clinic used billing numbers of other medical professionals without their knowledge in order to submit the fraudulent claims. The couple also paid co-conspirators to recruit Medicare beneficiaries for their Medicare identification numbers, and they instructed the beneficiaries to enroll into a targeted Medicare Part C & D plan. 26 Laboratories In August 2015, in Newark, New Jersey, three physicians were sentenced after pleading guilty to charges related to a test-referral kickback scheme. According to the investigation, Biodiagnostic Laboratory Services LLC (BLS) solicited and paid bribes to physicians in exchange for referring patient blood specimens to the laboratory. As part of the kickback scheme, BLS entered into sham consulting agreements, sham rental and service agreements, and offered cash and other inducements, such as third party businesses, credit card payments, and valuable items (cars and electronics). BLS used the patient blood specimens to submit more than $100 million in claims to Medicare and private insurers. In April and May of 2015, the physicians admitted to accepting approximately $1,500 or more per month in return for referring patient blood specimens. The three were sentenced to a combined 7 years and 2 months in jail and ordered to pay a combined $434,300 in restitution. BLS’s owner pleaded guilty to conspiracy to commit bribery and money laundering and is awaiting sentencing. In April 2015, two cardiovascular testing laboratories—Health Diagnostics Laboratory Inc. (HDL), of Richmond, Virginia, and Singulex Inc., of Alameda, California—agreed to resolve civil FCA allegations that they paid physicians kickbacks in exchange for patient referrals and billed federal health care programs for medically unnecessary testing. The laboratories allegedly induced physicians to refer patients for blood tests by paying them processing and handling fees of between $10 and $17 per referral and by routinely waiving patient co-pays and deductibles. Under the settlements, HDL will pay $47 million and Singulex will pay $1.5 million. Nursing Homes and Facilities In October 2014, Extendicare Health Services Inc., a nationwide skilled nursing facility, and its subsidiary Progressive Step Corporation (ProStep), a rehabilitation services provider, agreed to pay $38 million to settle civil FCA allegations that they billed Medicare and Medicaid for nursing services that were so deficient that they were effectively worthless and billed Medicare for medically unreasonable and unnecessary rehabilitation therapy services. The settlement resolves allegations that Extendicare, among other things, failed to have a sufficient number of skilled nurses to adequately care for its skilled nursing residents, failed to provide adequate catheter care to some of the residents, and failed to follow the appropriate protocols to prevent pressure ulcers or falls. As a result of the inadequate care, the government alleged that patients suffered fractures, head injuries, malnutrition, dehydration, pressure ulcers, infections, and amputation of limbs. In addition, the settlement resolves allegations that Extendicare provided medically unreasonable and unnecessary rehabilitation therapy services to its Medicare Part A beneficiaries so that it could bill Medicare for those patients at the highest possible per diem rate. In March 2015, two skilled nursing facility operators—the Catholic Health Care System, a/k/a ArchCare and Ross Manor, agreed to pay a total of $4.7 million to resolve civil FCA allegations that they submitted false claims to Medicare for rehabilitation services delivered by their subcontractor, RehabCare Group East, Inc. (RehabCare), a part of Kindred Healthcare, Inc.. The government alleged that the nursing homes failed to prevent RehabCare from routinely providing unreasonably high levels of therapy during so-called “assessment reference periods,” and then providing less therapy to those same patients outside the assessment reference periods. As a 27 result of this practice by RehabCare, the nursing homes frequently billed Medicare for its patients’ care at the highest therapy-based levels, even though the patients often were not receiving therapy at those levels. The settlements further resolved allegations that the nursing homes failed to prevent RehabCare from presumptively placing patients in the highest reimbursement level and planning amounts of therapy based on thresholds for billing at higher reimbursement levels rather than based on patients’ clinical needs. In June, 2015, Hebrew Homes Health Network Inc., a skilled nursing service provider in MiamiDade County, Florida, and its former president and executive director, agreed to pay $17 million to resolve civil FCA allegations of improperly paying doctors for referrals of Medicare patients requiring skilled nursing care. The settlement resolved allegations that Hebrew Homes hired numerous physicians ostensibly as medical directors, when in reality, 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. Patient Harm In October 2014, a Westchester County, New York cardiologist was sentenced to 3 years in prison and ordered to pay $2 million in restitution and forfeiture after pleading guilty to a charge of health care fraud. According to the investigation, the cardiologist lured new patients and maintained existing patients by offering them narcotic prescriptions in exchange for those patients undergoing unnecessary diagnostic tests and other medical procedures. He then billed Medicare, Medicaid, and private insurance carriers millions of dollars for these fraudulent claims. Investigators believe that he also performed cardiac procedures that served no legitimate medical purpose, billed for office visits that did not occur, and falsified patients' symptoms to justify costly and unnecessary diagnostic tests. (SF) In July 2015, a Detroit area hematologist-oncologist was sentenced to 45 years’ imprisonment and ordered to forfeit $17.6 million for the health care fraud, money laundering and kickback scheme he devised and executed. The government showed at a contested sentencing that the defendant administered medically unnecessary infusions and injections to 553 individual patients, including medically unnecessary chemotherapy, cancer treatments, intravenous iron, and other infusion and injection therapies. Patients receiving these treatments suffered many serious side effects as a result. The defendant also referred patients for unnecessary cancer tests at his diagnostic facility, United Diagnostics, PLLC, in Rochester Hills, Michigan. The defendant billed Medicare, Blue Cross Blue Shield of Michigan, Health Alliance Plan, and other insurers approximately $34 million in fraudulent claims through his cancer treatment clinic, Michigan Hematology Oncology P.C., which had multiple locations in Michigan, and through United Diagnostics. The defendant also admitted to soliciting and receiving kickbacks from Guardian Angel Hospice and Guardian Angel Home Health Care in exchange for referring his patients to those companies. Finally, he admitted that he laundered the proceeds of his infusion therapy fraud to promote his diagnostic testing fraud. 28 Pharmacies In December 2014, Rite Aid Corporation, a national retail drugstore chain, agreed to pay nearly $3 million to settle civil FCA allegations that it offered and provided improper inducements to beneficiaries of government programs to transfer their prescriptions to Rite Aid pharmacies in violation of the AKS. These inducements took the form of gift cards, gift checks, and similar promotions. In May 2015, PharMerica Corporation, a national long-term care pharmacy provider, entered into two settlements for a total of $31.5 million to resolve claims that it violated the FCA and the Controlled Substances Act. The government alleged that PharMerica dispensed and billed Medicare for schedule II controlled substances without a valid prescription. The prescriptions were allegedly invalid because they did not have a prescriber's signature or, in the case of emergency dispenses, were not based on an oral prescription from the prescriber followed by a written prescription with the prescriber's signature within seven days. In July 2015, Blanding Health Mart Pharmacy, a Jacksonville, Florida-based compounding pharmacy, agreed to pay $8.4 million to resolve civil FCA allegations that it sought reimbursement for compounding pharmaceutical prescriptions that were not medically necessary and were written by physicians that had never actually seen the patients. In August 2015, the Chief Executive Officer of a Kentwood, Michigan pharmacy was sentenced to ten years in prison, agreed to a 50-year exclusion from federal health care programs, and is likely to pay over $8 million in restitution in connection with a conspiracy to commit health care fraud by billing Medicare Part D plans, Medicaid, and private insurers for over $79 million in drugs that were adulterated and misbranded in violation of the Federal Food, Drug, and Cosmetic Act. The CEO’s conviction was the eighteenth criminal conviction in a case that included the felony convictions of six licensed pharmacists. This pharmacy serviced over 800 nursing and adult foster care homes between 2006 and 2010. As part of its operations they retrieved unused prescription drugs (including controlled substances) from those homes and returned those drugs to pharmacy stock in a manner that resulted in the cross-contamination of drugs, the improper labeling of drugs, the placement of different drug dosages into stock bottles, and the placement of different drugs in the same stock bottle. The pharmacy then re-dispensed and billed health care insurers for those adulterated and misbranded drugs. Physician Practice In October 2014, two groups of diagnostic centers agreed to pay a total of $2.6 million to settle civil FCA allegations. The first group, doing business as One Step Diagnostic, agreed to pay $1.2 million to settle allegations that it violated the Stark Law and the FCA by entering into sham consulting and medical director agreements with physicians who referred patients to its diagnostic centers. The second group, comprised of Complete Imaging Solutions LLC doing business as Houston Diagnostics, Deerbrook Diagnostics & Imaging Center LLC, Elite Diagnostic Inc., Galleria MRI & Diagnostic LLC, Spring Imaging Center Inc. and West Houston MRI & Diagnostics LLC, agreed to pay $1.4 million to resolve allegations that they engaged in improper financial relationships with referring physicians and improperly billed Medicare using 29 the provider number of a physician who had not authorized them to do so and had not been involved in the provision of the services being billed. (SF) In December 2014, a physician and a registered nurse were sentenced to 120 months and 48 months in prison, respectively, for their roles in a $3 million Medicare fraud scheme following their convictions at trial in May 2014. According to the evidence at trial, the physician defendant falsely certified that beneficiaries needed home health care and, in exchange for kickbacks, referred beneficiaries to PTM Healthcare Services Inc., a defunct home health care agency in Irving, Texas, at which his co-defendant served as the director of nursing. The nurse defendant and co-conspirators then prepared falsified medical records to make it appear that beneficiaries needed home health care services and billed Medicare for services that were medically unnecessary or not provided. The owner of PTM Healthcare Services previously pled guilty in 2013 to health care fraud conspiracy. (SF) In February 2015, a jury in Detroit convicted an unlicensed physician for his participation in a nearly $4.7 million Medicare fraud scheme. The evidence at trial revealed that the defendant used pre-signed prescription pads from a licensed physician to prescribe drugs to Medicare patients and also referred patients for medically unnecessary home health care services in exchange for kickbacks. In January 2015, shortly before trial, the owner of Cherish Home Health Services, Inc., one of the companies to which the unlicensed physician referred patients, pled guilty and admitted to paying kickbacks to the unlicensed physician and billing Medicare for home health care services that were not provided. Two other defendants—a patient recruiter and a physician—previously pled guilty for their roles in the fraud. (SF) In February 2015, an Illinois physician pled guilty to accepting illegal kickbacks and benefits totaling nearly $600,000 from two pharmaceutical companies—Teva Pharmaceuticals USA Inc. and IVAX LLC—in exchange for regularly prescribing the anti-psychotic drug Clozapine to his patients. As set forth in the plea agreement, the physician agreed to switch his patients to generic Clozapine if the manufacturer agreed to pay him $50,000 under a one-year “consulting agreement” and to provide other benefits to the physician. The physician also agreed to pay over $3.8 million to settle a parallel civil FCA lawsuit alleging that, by prescribing Clozapine in exchange for kickbacks, he caused the submission of false claims to Medicare and Medicaid for the Clozapine he prescribed for thousands of elderly and indigent patients in at least 30 Chicago-area nursing homes and other facilities. Previously, in March 2014, Teva and IVAX paid a total of $27.6 million to resolve allegations related to paying kickbacks to the physician defendant. (SF) In March 2015, a New York doctor pled guilty to health care fraud conspiracy for his involvement in a scheme to fraudulently bill Medicare for $14.2 million in claims for medically unnecessary treatments. As part of the plea, the defendant agreed to pay $5.4 million in restitution to the Medicare program, which represents the total amount of money Medicare paid as the result of the fraudulent claims. In connection with his guilty plea, the defendant admitted that he and other medical providers at the clinic submitted approximately $14.2 million in false and fraudulent claims to Medicare for medically unnecessary vitamin infusions, physical therapy, and occupational therapy that did not qualify for reimbursement by Medicare. 30 (SF) In April 2015, a physician who served as the medical director of Hollywood Pavilion, LLC, a state-licensed psychiatric hospital located in Hollywood, Florida, was sentenced to 60 months’ imprisonment for his role in a $67 million Medicare fraud scheme. Evidence at trial revealed that the defendant falsified medical records certifying that patients qualified for and received intensive outpatient services. The evidence demonstrated that the defendant signed patient files for over 400 patients, certifying that he had provided mental health services to each of them, even though he never saw or provided any treatment to the patients. Hollywood Pavilion used these falsified records to submit over 2,800 false claims to Medicare. Five other individuals previously were convicted and sentenced in this case, including Hollywood Pavilion’s former chief executive officer, chief operating officer, and clinical director. In April 2015, Family Dermatology P.C., the owner and operator of dermatology practices and a dermatopathology laboratory, agreed to pay $3.2 million to settle civil FCA allegations that its financial relationships with certain employed physicians violated the Stark Law. Family Dermatology employs dermatologists as independent contractors and routinely required them to use Family Dermatology’s in-house pathology lab, Nelson Dermatopathology, for their pathology services. The government alleged that Family Dermatology violated the Stark Law and FCA by billing Medicare for dermatopathology analyses performed by Nelson Dermatopathology on specimens that were sent to the laboratory by these employed physicians. In April 2015, a medical doctor and sole physician at a pain clinic in Athens, Tennessee, was sentenced to 28 months and was ordered to pay $7.5 million in restitution to Medicare for misbranding drugs with the intent to defraud. The doctor purchased 254 vials of Botox from a foreign supplier, and had used 204 vials during the course of the scheme to defraud, but had billed Medicare for 16,119 vials. A forfeiture order was also entered against the $6.8 million seized from the defendant’s bank accounts. In May 2015, Garden State Cardiovascular Specialists P.C., a New Jersey cardiology practice that owns and operates several facilities under the name NJ MedCare/NJ Heart, agreed to pay $3.6 million to settle civil FCA allegations that its facilities and their principals submitted claims to Medicare for various cardiology diagnostic tests and procedures, including stress tests, cardiac catheterizations, and external counterpulsation, which were not medically necessary. (SF) In May 2015, an administrator and a biller were convicted after trial for their roles in a $4 million Medicare fraud scheme involving Medicall Physicians Group, a home visiting physician practice in Schaumburg, Illinois. The evidence at trial revealed that Medicall billed Medicare for services that were never provided to patients, including physician oversight of patient care plans, extended patient visits, and other services purportedly provided to individuals who had already died. A third defendant, the owner and medical director of Medicall, pled guilty prior to trial. In September 2015, the lead administrator of a home visiting physician practice was sentenced to 87 months in prison and the medical biller, who submitted many of the fraudulent claims to Medicare, was sentenced to serve 45 months in prison and pay restitution of approximately $1 million. 31 (SF) In August 2015, a dermatologist was sentenced to seven years’ imprisonment, following a jury trial that resulted in six mail and wire fraud convictions. The defendant also was ordered to pay over $3.7 million in restitution to Medicare, private insurers, and patients. According to the evidence at trial, the defendant misdiagnosed patients’ benign skin conditions as pre-cancerous lesions and falsely billed cosmetic treatments as the destruction of large numbers of such lesions. In August 2015, a Brooklyn doctor was sentenced to 24 months in prison for his role as the “no show” doctor in a $13 million health care fraud conspiracy scheme. Medical services were provided by a physician’s assistant who was acting without supervision by a medical doctor, but the doctor still billed Medicare and Medicaid for the services using his provider number. He also falsely certified that patient transportation by ambulette was medically necessary and billed for this unnecessary service. As part of the sentence, the court entered an order directing the doctor to pay $6.4 million in restitution and to forfeit $6.6 million. Prescription Drugs (SF) In October 2014, the operator of a Dallas family practice and weight loss management clinic based in Dallas, Texas, was sentenced to 7 years and 3 months of incarceration and ordered to forfeit his house, cars, boat, and funds from several bank accounts after pleading guilty to conspiracy to unlawfully distribute controlled substances. The investigation revealed that clinic operated as a pill mill, where “dealers” recruited and drove “patients” in groups to the clinic to obtain prescriptions for hydrocodone and Xanax. The clinic’s office manager and three dealers were also sentenced during this reporting period to more than 18 years in prison, combined. In October 2014, two individuals were sentenced to a combined 17 years and 1 month in jail and ordered to pay $6.2 million in joint and several restitution after pleading guilty to conspiracy to commit health care fraud. The two individuals operated a Miami-based retail pharmacy. The investigation revealed that their co-conspirators recruited and paid Medicare beneficiaries to obtain prescriptions, including for expensive antipsychotic and skin treatment pharmaceutical drugs that the co-conspirators subsequently furnished back to the two men. The two then used the fraudulent prescriptions to bill the Medicare Part D program. I...
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Module 01 Assignment - Healthcare Fraud and Abuse
Article Title – HCFACP – Annual Report for 2015
Questions
Provide your answer(s) beneath each question as indicated.

1.

HIPAA established a national Healthcare Fraud and Abuse ______ Program (HCFACP).

Answer(s): Control
2.

HCFACP is under the control of the Attorney General and the Secretary of the Department of
_________ and _________ Services (HHS).

Answer(s): Health and Human
3.

They identify and prosecute the most egregious instances of health...


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