Archive for June, 2014

Omnicare, the Nation’s Largest Nursing Home Pharmacy, to Pay $124 M to Settle Allegations Involving False Billings to Federal Health Care Programs

Omnicare Inc., the nation’s largest provider of pharmaceuticals and pharmacy services to nursing homes, has agreed to pay $124.24 million for allegedly offering improper financial incentives to skilled nursing facilities in return for their continued selection of Omnicare to supply drugs to elderly Medicare and Medicaid beneficiaries, the Justice Department announced today .    Omnicare is headquartered in Cincinnati, Ohio.
“Health care providers who seek to profit from providing illegal financial benefits will be held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “Schemes such as this one undermine the health care system and take advantage of elderly nursing home residents.”
“Omnicare provided improper discounts in return for the opportunity to provide medication to Medicare and Medicaid beneficiaries,” said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio. “Nursing homes should select their pharmacy provider based on the best quality, service and cost to the residents, not based on improper discounts to the nursing facility.”

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James Hoyer Client Named Sole Whistleblower in $193M Settlement

A federal judge has ruled former Endo Pharmaceuticals Sales Representative Peggy Ryan is the sole whistleblower eligible for a portion of the company’s $193 million off-label marketing settlement, announced in February by the U.S. Justice Department.   Ryan is represented by the James Hoyer Law Firm.

The order was issued by Senior Judge Robert Kelly of the U.S. District Court for the Eastern District of Pennsylvania.  Judge Kelly granted Ryan’s motion for Relator’s Share and denied the requests of two other later-filed Relators, Max Weathersby and Gursheel Dhillon.

“Ryan supplied the Government with the initial notification of Defendants’ fraudulent activities and then proceeded to go to extraordinary lengths to provide further information to aid the Government in prosecuting the FCA (False Claims Act) action.  In light of this contribution and legal justifications presented by Ryan, it is our holding that Ryan is the sole Relator eligible to receive the settlement award.” Judge Kelly wrote.

Judge Kelly said his decision was based upon “the extensive role Ryan played” and serves to “promote the intent of the FCA” which is “to provide incentives to relators to ‘promptly alert the government to the essential facts of a fraudulent scheme.’”  He went on to say, “In the context of this objective, it is apparent that allowing multiple relators to share in the recovery for the same claim would drastically decrease the incentive for a ‘whistleblower’ to promptly bring a qui tam action.”

“In addition to filing the first Complaint in this matter, Ryan also provided extensive assistance in the investigation of Defendants’ fraudulent activities by serving as a confidential source in the Government’s covert criminal investigation of Defendants over a several year period beginning in 2005,” Judge Kelly also wrote in the Order.

He cited a statement submitted on Ryan’s behalf by the retired FBI agent with whom Ryan and the James Hoyer Law Firm worked closely throughout the investigation. “During the course of the investigation, Ryan provided the FBI with Defendants’ off-label sales and training materials, and with over two hundred (200) hours of recorded conversations with employees of Defendants concerning off-label sales.”

Click here to read Financial Writer Al Lewis’ story on Ryan and here for his article on The Wall Street Journal’s MarketWatch.

Returning Money to Taxpayers

Endo Health Solutions and its subsidiary Endo Pharmaceuticals, Inc. agreed to pay $192.7 million in February of 2014 to settle civil and criminal charges that stemmed from Ryan’s suit.  Ryan alleged the company illegally marketed a pain treatment patch called Lidoderm for ailments far beyond its approved use.

The off-label marketing led to hundreds of millions of dollars in improper Medicaid and Medicare payments.  This settlement serves to return a portion of that money to the taxpayer.  From the total settlement, $21 million is allocated to resolve the criminal charges, and $172 million will go to settle civil charges under the state and federal False Claims Acts.

The Whistleblower

Ms. Ryan was an Endo sales person hired in 2002 to sell Lidoderm.  She became concerned when the company pressured her to sell the drug off-label.  The pain patch was only approved to treat symptoms of postherpetic neuralgia, a rare disease which is a complication of Shingles.  “Lidoderm had not been proven safe or effective for other uses, but the company pushed me and all the other sales people to sell Lidoderm for everything from low back pain, to carpel tunnel syndrome to neuralgia, and I just did not feel comfortable doing that,” Ryan said.

After filing suit, Ryan was enlisted to aid the FBI in its investigation.  She turned over hundreds of documents, internal voicemails, and even wore a wire for the FBI, recording hundreds of hours of conversations with supervisors.

“Peggy Ryan was a tireless advocate for the taxpayer,” said Chris Hoyer, Founding Partner of the James Hoyer Law Firm.  “She worked closely with the FBI and Department of Justice for nearly a decade providing invaluable testimony and evidence.”

The Settlement

In addition to the monetary portion, the settlement also includes a deferred prosecution agreement, in which Endo admitted that it intended that Lidoderm be used for unapproved indications and that it promoted Lidoderm to health care providers for those unapproved indications, according to the Department of Justice.   As part of the settlement, Endo agreed to enter into a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General that requires the company to implement measures designed to avoid or promptly detect conduct similar to that which led to this resolution.

The False Claims Act

The False Claims Act allows private citizens to bring civil actions on behalf of the government in order to recover taxpayer money when fraud is suspected.    Under the law, the whistleblower is entitled to a 15-30% share of a civil recovery.  Ryan’s share of the settlement has yet to be determined.

“Whistleblowers, like Peggy Ryan, are to be commended for their bravery and perseverance,” Attorney Hoyer said.  “It’s very easy for a private citizen who sees wrong-doing to look the other way, but Peggy didn’t do that. She did the right thing, and with her help, the taxpayers will now receive restitution from Endo Pharmaceuticals.”


Whistleblower case against Lance Armstrong proceeds towards trial

Timothy A. Clary/AFP/Getty Images

Photo: Timothy A. Clary/AFP/Getty Images

Whistleblower cases are not typically high-profile, media-fueled cases. But, when the defendant is one of America’s formerly-beloved sports superstars, the False Claims Act becomes front-and-center news around the world. And according to an order from a federal judge last Thursday, the most highly-publicized False Claims Act case in recent memory will move forward towards what is sure to be an equally high-profile trial.

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Can you be forced to arbitrate your FCA claims?

Image from Public Citizen

Image from Public Citizen

The answer, unfortunately, is “maybe.”

Modern employment contracts almost always contain some kind of arbitration provision whereby you and your company agree to resolve disputes through arbitration.

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Shands Hospitals Pay $3.25 Million in 2nd Part of Florida Whistleblower Settlement

Shands Health Care System has agreed to pay $3.25 million to settle outstanding claims that six of its Florida hospitals submitted improper outpatient billing to the government which resulted in overpayments from Medicaid, Medicare and TRICARE.   This settlement comes on the heels of a $26 million settlement in August of 2013, which resolved additional claims by the same whistleblower also related to improper patient admissions.

James Hoyer Law Firm Partner Christopher Casper served as co-counsel for whistleblower Terry Myers, along with Attorney Marlan Wilbanks, of the Wilbanks and Bridges Law Firm.

Mr. Myers filed the suit in the Middle District of Florida in April of 2008, naming Shands Health Care System and six of its Florida Hospitals:  Shands Alachua General Hospital; Shands Jacksonville Medical Center, Inc.; Shands Teaching Hospital and Clinics, Inc., d/b/a Shands at the University of Florida; Shands at Lakeshore, Inc.; Shands Live Oak; and Shands Starke.

In regards to the remaining allegations following the $26 million settlement, Myers contended that Shands knowingly submitted observation claims to Medicare, Medicaid and TRICARE for certain services and procedures which Shands knew or should have known that physician orders were missing or otherwise deficient for the charges billed.

Myers is the founder and President of YPRO Corporation. The company is a nationwide healthcare consulting firm that was hired by Shands in 2006 and 2007 to conduct audits to determine if Medicare and Medicaid rules were being followed.  Serious billing, coding, and compliance issues were uncovered by the whistleblower’s company and relayed to Shands Corporate Executives and Shands Compliance officers.  Mr. Myers felt compelled to take action by filing the whistleblower suit after Shands failed to correct the problems and self-report the overpayments to the government.

To settle the out-patient/observation claims, Shands will pay the United States $3.14 million for the federal portion of the settlement and an additional $103,668 to the State of Florida for the state portion of the settlement.

The lawsuit was filed under the federal False Claims Act (FCA) and the Florida False Claims Act. The False Claims Act allows private citizens to bring civil actions on behalf of the government in order to recover taxpayer money when fraud is suspected.   If a case is successful, the whistleblower is entitled by law to recover money from the Defendants.


Federal Prosecutors Seek More Than $96 Million in Damages From Lance Armstrong

American taxpayers have 96 million reasons to care what Lance Armstrong says under oath later this month.

Prosecutors are seeking more than $96 million from the disgraced cyclist, according to documents Armstrong’s lawyers attached to motions they filed in Washington federal court earlier this week.

Armstrong, according to the documents filed in the False Claims Act whistle-blower lawsuit first filed by ex-teammate Floyd Landis in 2010, is scheduled to testify under oath at a June 23 deposition in Austin, Texas.

The government – which was widely criticized for dropping a criminal investigation of Armstrong in 2013 — joined Landis’ lawsuit in 2013, several months after the U.S. Anti-Doping Agency issued a blistering report that accused the cyclist of leading the most sophisticated and successful doping ring in sports history.

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Assistant Attorney General Stuart Delery Lauds the False Claims Act

Photo Credit: U.S. D.o.J.

Assistant Attorney General Stuart Delery
Photo Credit: U.S. D.O.J.

On Thursday, June 5, Assistant Attorney General Stuart Delery, head of the Department of Justice’s Civil Division, spoke to a conference of qui tam attorneys in Washington, D.C. at the American Bar Association’s 10th National Institute on the Civil False Claims Act and Qui Tam Enforcement.  Delery spoke very highly of the False Claims Act, lauding its success in recovering more than $17 billion in the past five years.  Delery focused on conveying a simple message: the False Claims Act works.

It works because it is an effective tool to fight fraud across the full spectrum of federal programs and initiatives.

The FCA works because it provides powerful incentives for companies to do business the right way.

And the FCA works because it safeguards billions of dollars of taxpayer money, protecting health and safety, improving public confidence in government, and allowing key programs to function better.

But perhaps the most important reason why the False Claims Act works is that it has accomplished one of the core goals that President Lincoln referenced when it was first adopted: protecting the American people.

That protection comes from the billions of dollars in financial recoveries that the statute has made available, which have saved taxpayers from having to bear in full the costs of fraud.   It also comes from restoring our confidence that government programs are functioning to benefit us, not to line the pockets of people who commit fraud.

James Hoyer partner Elaine Stromgren was in attendance for Assistant Attorney General Delery’s speech.  Stromgren stated, “I thought it was important that Mr. Delery emphasized the fact that the False Claims Act not only returns money to the taxpayers, but also is an effective tool in protecting the health and safety of the American public.  There have been many successful qui tam cases against defendants who have engaged in practices which have resulted in significant harm, in the healthcare arena for example.  FCA relators can play an important role in working with the government to help put an end to those dangerous practices.”

It is extremely encouraging to have Assistant Attorney General Delery publicly recognize the value of the False Claims Act.  The public-private partnership between whistleblowers and the Department of Justice is paramount to the success of FCA cases, and a continued commitment by the Department of Justice to pursuing fraudsters means there will be a bright future for the False Claims Act.

For the full text of Assistant Attorney General Delery’s speech, click here.


Robert Glazer a Los Angeles Physician Indicted in $33 Million Medicare Fraud Scheme

A Los Angeles physician was indicted today for a $33 million scheme to defraud Medicare, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney André Birotte Jr. of the Central District of California, Special Agent in Charge Glenn R. Ferry of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) for the Los Angeles Region and Assistant Director in Charge Bill L. Lewis of the FBI’s Los Angeles Field Office.

Robert A. Glazer, 67, of Los Angeles, California, was indicted in the Central District of California and charged with one count of conspiracy to commit health care fraud.

According to court documents, Glazer operated a medical clinic located in Los Angeles.    From approximately January 2006 through May 2014, Glazer allegedly billed Medicare for services that were not medically necessary, and at times were not provided to the Medicare beneficiaries.    In addition, Glazer allegedly signed prescriptions, certifications, and other medical documents for medically unnecessary home health services, hospice services, and power wheelchairs and other durable medical equipment (DME).    Glazer’s co-conspirators then sold the prescriptions and certifications to DME supply companies, home health agencies, and other providers, knowing that the prescriptions and certifications were fraudulent.    Based on these fraudulent prescriptions and certifications, the DME supply companies, home health agencies, and other providers then allegedly submitted false and fraudulent claims to Medicare.

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FBI Plays a Supporting Role in Investigating Student Aid Fraud

It’s a yearly spring ritual: college-bound students, young and old, applying online for much-needed federal student aid in the form of grants or loans.

Unfortunately, a few unscrupulous individuals view Title IV Federal Student Assistance funding as a way to line their own pockets—not to get an education. According to a recent assessment by the U.S. Department of Education’s Office of Inspector General, the number of aid recipients potentially taking part in criminal fraud rings is increasing.

And while the FBI doesn’t generally become involved these cases because of our necessary focus on counterterrorism, cyber crime, and other national security and major criminal threats, we do—as resources allow—assist our partners at the Department of Education and other agencies in rooting out some of the more egregious offenders. The Bureau brings to the table the same investigative methods and techniques we’ve used so successfully against criminals who commit other types of government fraud.

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