DOJ’s Recent Enforcement Actions Under the False Claims Act - Brown, LLC

DOJ’s Recent Enforcement Actions Under the False Claims Act

The Justice Department (DOJ) is actively pursuing healthcare fraud prosecutions under the False Claims Act (FCA), which heavily relies on the use of health care whistleblowers. The Department of Justice (DOJ) has steadily announced at least one FCA fraud settlement almost every week. Below are a few example False Claims Act settlements from recent enforcement action:

Recently, two fraud cases involving medical devices were resolved with announcements from the Department of Justice. An example of this is the case of Zyno Medical, a firm in Massachusetts that allegedly shipped out IV administration kits that were faulty. The other case involved Jet Medical, a Pennsylvania firm, that allegedly sold unapproved products for treating migraines.

Zyno Medical

Two employees who felt compelled to blow the whistle on Zyno Medical, LLC (Zyno) filed a False Claims Act lawsuit against the company for having allegedly sold defective IV kits. Chemotherapy and other drugs were administered to Medicare patients using these kits. Due to the alleged defect, several drugs leaked while being infused. It was alleged that even as early as November 2015, Zyno was aware of the flaw. Yet it wasn’t until late July 2016 that it issued a recall for the kits. The company, however, kept on selling them.

The government granted the whistleblowers 20% of the settlement money in whistleblower rewards, for a total of $493,140, which was paid by Zyno. The DOJ said in a statement that Medicare patients receiving intravenous chemotherapy or other medications should not have to wonder if the devices they are using will function properlyMoreover, the head of DOJ’s Civil Division, Principal Deputy Assistant Attorney General Brian M. Boynton, issued the following warning to manufacturers of medical devices:

“When medical device manufacturers, such as those who make medical devices, intentionally endanger people receiving healthcare through a federal program, we will seek legal redress.”

Jet Medical

Jet Medical was subject to both criminal and civil penalties as part of the settlement. A medical device called Allevio SPG Nerve Block Catheter (Allevio) was being sold by Jet. Allevio, according to Jet, was able to successfully treat migraines by administering nerve blocks into the skull. Yet, despite boasting about it having a therapeutic benefit, it did not even try to obtain necessary FDA clearance for this application. Furthermore, Jet allegedly never conducted adequate research into the safety and efficacy of Allevio for the treatment of migraines.

A False Claims Act whistleblower claimed that Jet and two affiliated organizations induced suppliers to submit bogus claims for Allevio. They claimed that Medicare would not pay for the nerve-blocking medical device Allevio because it had not been approved or authorized by the FDA to treat headaches. There was a civil False Claims Act action brought by the DOJ, and it was settled for $545,000, which would enable a whistleblower awards of around $110,000 using 20% as the benchmark. To top it all off, Jet settled for a deferred prosecution and criminal penalties of $200,000. Jet agreed to pay the settlements after admitting it had distributed medical devices which were not FDA-approved.

Principal Deputy Assistant Attorney General Boynton stressed the following in light of the settlement announcement:

“The Food and Drug Administration’s (FDA) clearance and approval procedure plays a critical role in ensuring the safety, efficacy, and acceptable use of medical devices intended for patient treatment. We will not stand for businesses putting profit before the health of their customers.”

The DOJ continues to prioritize medical device fraud enforcement. These agreements show the DOJ and the FDA’s dedication to using the FCA to fight device manufacturers and distributors that endanger patients and waste taxpayer dollars.

The Cardiac Monitoring Fraud Scheme

In this case, through an online enrollment portal, the defendants allegedly influenced doctors to sign up for the most lucrative monitoring program. When doctors consciously tried to save money by using less expensive monitoring providers, the program allegedly defaulted to charging for the most expensive products. Defendants’ plan resulted in Medicare allegedly paying fraudulent claims for telemetry services that were both unnecessary and excessive. More than $13.4 million will be paid out by the defendants to settle these lawsuits, according to the terms of the settlement. Under the False Claims Act the whistleblower stand to gain $2.6 million dollars as a whistleblower award using 20% as a benchmark.