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False Claims Act Settlements: First Half 2024 Highlights
The False Claims Act (FCA) is possibly one of the most potent weapons against fraud that the federal government has since it incentivizes individuals who are on the inside to come forward and receive up to 30% of what the government recovers. With billions of False Claims Act recoveries each year that means hundreds of millions of dollars of whistleblower awards through the FCA alone. This article highlights some FCA settlements from the first half of 2024 involving such schemes as fake billing, kickbacks, opioid abuse and more against government programs like Medicare and Medicaid.
New York-Presbyterian/Brooklyn Methodist Hospital False Claims Act Settlement
In early 2024, New York-Presbyterian/Brooklyn Methodist Hospital agreed to pay$17.3 million to resolve allegations that they gave illegal kickbacks to physicians for referring patients to the hospital’s chemotherapy infusion center. The allegations also stated the hospital improperly billed Medicare and Medicaid for services provided by non-physicians when there was inadequate supervision by the physicians [1]. The whistleblower in this matter is eligible for up to $5.19 million as a whistleblower award, which underscores the purpose of the statute to heavily incentivize individuals with intimate information to come forward and blow the whistle.
Lincare Inc. FCA Settlement
Lincare Inc., a durable medical equipment supplier, will pay $25.5 million to resolve allegations that it fraudulently billed a federal health care program. According to allegations, Lincare violated the False Claims Act when it submitted claims seeking reimbursement for non-invasive ventilators provided to patients through federal healthcare programs that were either not medically necessary or not being used. Moreover, Lincare was also charged with violations of the Anti-Kickback Statute as it waived coinsurance payments to induce patients to rent its equipment [2]. The individual is eligible to receive up to $7.65 as a False Claims Act whistleblower reward.
Endo Health Settlement
Endo Health Solutions Inc. (EHSI) agreed to pay a False Claims settlement of $475.6 million to settle civil allegations related to the opioid drug Opana ER, which the company had allegedly improperly marketed as abuse deterrent, tamper resistant, and/or crush resistant, despite a lack of clinical data supporting those claims. The misleading marketing scheme allegedly targeted healthcare providers that EHSI knew were prescribing Opana ER for non-medically accepted indications which led to widespread misuse of the drug.[3] In this instance, the reward for the whistleblower could go as high as $142.68 million. This case shows that the FCA has played an active role in combatting the opioid epidemic.
False Claims Act Settlement with Cape Cod Hospital
Cape Cod Hospital has reached an agreement to pay $24.3 million over accusations it wrongfully billed for TAVR procedures that did not comply with the applicable Medicare requirements. At the time, Medicare rules mandated that hospitals involve designated clinical personnel to independently assess the suitability of potential patients for TAVR before carrying out the procedure. These personnel were required to document their clinical reasoning and provide this rationale to the medical team performing the TAVR procedure. The specific violations were found to be poor patient evaluation and inadequate clinical staff documentation [4]. The whistleblower will receive approximately $4.36 million as a False Claims Act reward for exposing these allegedly fraudulent activities
Philadelphia Pharmacy False Claims Act Settlement
Past and present owners of Pennmark Pharmacy in Philadelphia have agreed to pay a settlement of $4.6 million to resolve allegations of submitting phony bills to Medicare and Medicaid for prescriptions never provided, with most of the higher billed brand name drugs that were prescribed actually being substituted with less expensive ones but billed at the higher level[5]. Based on the whistleblower provisions of the False Claims Act, this whistleblower could be awarded an amount of up to $1.38 million.
KVK Research Inc. False Claims Act Settlement
KVK Research Inc. pleaded guilty to distributing adulterated drugs without proper manufacturing controls, leading to false claims made to the TRICARE program, Federal Employees Health Benefits Program (FEHBP), Veterans Administration (VA), Department of Labor, and the Office of Workers Compensation Programs (DOL-OWCP). KVK agreed to pay $1.5 million in criminal restitution and a False Claims Act settlement of $2 million to resolve the allegations. The alleged fraud involved not having proper quality controls as mandated by current good manufacturing practice regulations, which led to the introduction of adulterated drugs into interstate commerce.[6]. Up to $600,000 of the amount paid by the company will go as a whistleblower reward for uncovering these violations.
AmeriHealth Clinics False Claims Act Settlement
Two Idaho health clinics who are a subsidiary of AmeriHealth Clinics, agreed to a settlement of $2 million after allegations arose that the clinics had resorted to using unqualified employees to submit fraudulent claims to federal healthcare programs. The Complaint also alleged that the defendants engaged in an illegal kickback scheme with a third-party laboratory, and provided false information to secure forgiveness for a PPP loan exceeding $750,000. Misrepresentation in these cases is related to qualifications and services rendered [7]. The whistleblower, in this case, was entitled to recover up to $ 600,000 as an award.
ChristianaCare False Claims Act Settlement
After being accused of kickback schemes with private physicians and improper billing towards Medicare and Medicaid, ChristianaCare agreed to settle the allegations for $47.1 million. The false claims concerned inducements for referrals and billing for services not appropriately supervised or documented [8]. The whistleblower, a former chief compliance officer, walked away with a whistleblower award of $16.6 million which was still over $12 million after attorneys’ fees for his role in the case.
The False Claims Act continues to be a powerful resource in fighting healthcare fraud like Medicare Fraud and Medicaid Fraud, with whistleblower-initiated actions leading the way. These cases are illustrative of the significant role that whistleblowers and the FCA play in safeguarding federal healthcare programs from fraud and that. whistleblowers can receive tremendous rewards for their courage and efforts to bring fraudulent activities to light and thereby deter future conduct.