Posts Tagged ‘kickbacks’

Rare Case of Patient Whistleblower leads to Successful Settlement

AgeVital agrees to pay $775,000 to settle kickback claims

[*See video below on coverage of the settlement on WFLA channel 8 in Tampa. James Hoyer Attorney Jesse Hoyer is interviewed*]

SARASOTA, FL – The action of one patient who recognized possible fraud against Medicare led to this settlement which returns nearly one million dollars to taxpayers.  Vital Life Institute LLC, known as AgeVital Pharmacy LLC, along with owners Jenny and William Wilkins, have agreed to pay at least $775,000 to resolve claims that they violated the False Claims Act by engaging in an illegal kickback scheme.

“The importance of this settlement goes far beyond the amount recovered. It demonstrates the value and impact of everyday citizens who come forward to expose fraud,” said attorney Jesse Hoyer, local counsel for the whistleblower case. “Medicare, Medicaid and Tricare beneficiaries who carefully review their Explanation of Benefits statements can make a difference.”

The settlement resolves allegations that Sarasota-based AgeVital paid kickbacks to a third-party marketing company to solicit patients for compounded drug prescriptions, regardless of patient need. The marketing company allegedly arranged for prescribers to sign those prescriptions, which were then referred to AgeVital to be filled in exchange for a substantial share of Tricare and Medicare reimbursements.

Details of case

The case was filed in federal court in Tampa in 2015, after Manfred Knopf, a patient in New Jersey who received prescriptions he did not need or want, recognized that Medicare was billed for the products. AgeVital solicited Mr. Knopf to purchase the expensive compounded pharmaceuticals after he suffered a slip and fall accident that required treatment for his injuries.

Despite never agreeing to receive these medications, AgeVital began sending containers of expensive compounding creams to his doorstep. The healthcare prescriber listed on the packages delivered was Dr. Jean Wilson, a provider Knopf had never heard of or been treated by. Medicare paid approximately $37,377 for these medically unnecessary compounded pharmaceuticals sent to Knopf. After recognizing what he believed was fraud, Knopf decided to report his concerns to the government.

With the assistance of attorney David Williams of Kline & Specter, P.C. (along with Jesse Hoyer and Elaine Stromgren of James Hoyer, P.A.), the lawsuit was filed under the qui tam or whistleblower provisions of the False Claims Act. The Act allows private citizens who suspect

fraud against the government to bring a lawsuit on behalf of the United States for false claims and to share in any recovery. 

“The False Claims Act gives us a powerful tool with which to expose fraud and recover money on behalf of taxpayers. We thank Mr. Knopf for recognizing the fraud and having the courage to bring it to the Government’s attention,” said attorney Hoyer.

Anti-Kickback Statute

The Anti-Kickback Statute prohibits the knowing and willful payment of compensation to induce the referral of services or items that are paid for by a federal health care program. Individuals and entities can be subject to liability under the False Claims Act for submitting claims to federal health care programs in violation of the Anti-Kickback Statute.

“Kickback schemes undermine public trust in our health care system and lead to unnecessary health care costs at taxpayers’ expense,” said Assistant Attorney General Jody Hunt for the Department of Justice’s Civil Division.

“We will not tolerate those who profit at the expense of taxpayers by entering into illegal kickback arrangements,” says U.S. Attorney for the Middle District of Florida Maria Chapa Lopez. “Our office is committed to holding individuals accountable for corporate malfeasance.”

Mr. Williams, Ms. Hoyer and Ms. Stromgren sincerely appreciate the efforts of the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Middle District of Florida, the FBI, the Defense Criminal Investigative Service and the U.S. Department of Health and Human Services Office of Inspector General that contributed to the resolution of this case.

Kline & Specter P.C. is a nationwide personal injury and medical malpractice law firm with offices in Pennsylvania, New Jersey, Delaware, and New York.

James Hoyer, P.A. is a nationwide whistleblower and employment law firm with offices in Florida, Washington D.C., and Michigan.

 

Olympus Med Equip Co. to Pay $646 Million Over Kickbacks & Bribes

The  largest distributor of endoscopes and related equipment in the United States, Olympus Corporation, will pay $623.2 million to resolve criminal charges and civil claims relating to a scheme to pay kickbacks to doctors and hospitals, the Department of Justice announced today.  The Justice Department’s Criminal Division also announced that a subsidiary of the distributor will pay $22.8 million to resolve criminal charges relating to the Foreign Corrupt Practices Act (FCPA) in Latin America.

Lavish Gifts

The LA Times reports that after Olympus paid to fly three doctors from a prominent California hospital to Japan for a week-long vacation, one of the physicians thanked the company for providing them with “so much extra entertainment that we did not expect.”

The expense-paid trip was just one of the dozens of illegal kickbacks that the Japanese maker of endoscopes paid to American doctors and hospitals for at least five years as it sought to increase sales in its most lucrative market, according to a criminal complaint federal prosecutors released Tuesday.

Among the company’s other illegal payments and gifts, the complaint said, were $400,000 worth of endoscopes given to a doctor after he persuaded a New York hospital to buy millions of dollars’ worth of Olympus equipment, and the free use of scopes worth $1 million provided to a Midwestern institution.

At one Olympus-sponsored forum, the company paid for doctors’ lavish meals, ballooning, winery tours, golf and spa treatments because it was “a great way to network, talk business, socialize without our competitors,” an Olympus employee explained, according to the complaint.

Whistleblower was Chief Compliance Officer

Pharmalot reports the agreements resolve a long-running investigation that was triggered by a whistleblower lawsuit filed by a former Olympus executive. John Slowik had worked at the device maker for nearly 18 years before becoming its first chief compliance officer in 2009. However, he was fired the following year after protesting kickbacks and attempting to implement reforms, according to his attorney. Slowik will receive $51.1 million from the civil settlement, before paying attorneys fees.

Anti-Kickback Statute Violations

The DOJ news release says Olympus Corp. of the Americas (OCA) was charged in a criminal complaint filed today in Newark, New Jersey, federal court with conspiracy to violate the Anti-Kickback Statute (AKS), which prohibits payments to induce purchases paid for by federal health care programs.  OCA has entered into a three-year deferred prosecution agreement (DPA) that will allow it to avoid conviction if it complies with the reform and compliance requirements outlined in the agreement.

“For years, Olympus Corporation of the Americas and Olympus Latin America dropped the compliance ball and failed to have in place policies and practices that would have prevented the substantial kickbacks and bribes they paid,” said U.S. Attorney Fishman. “It is appropriate that they be punished for that.  At the same time, the deferred prosecution agreement takes into account the companies’ cooperation and commitment to fully functional corporate compliance.”

As a result of the conduct outlined in the government’s criminal complaint and DPA, OCA has agreed to pay a $312.4 million criminal penalty and an additional $310.8 million to settle civil claims under the federal and various state False Claims Acts, the largest total amount paid in U.S. history for violations involving the AKS by a medical device company.

“The Department of Justice has longstanding concerns about improper financial relationships between medical device manufacturers and the health care providers who prescribe or use their products,” said Principal Deputy Assistant Attorney General Mizer.  “Such relationships can improperly influence a provider’s judgment about a patient’s health care needs, result in the use of inferior or overpriced equipment, and drive up health care costs for everybody.  In addition to yielding a substantial recovery for taxpayers, this settlement should send a clear message that we will not tolerate these types of abusive arrangements, and the pernicious effects they can have on our health care system.”

In a separate DPA, Olympus Latin America Inc. (OLA), a subsidiary of OCA, will pay a $22.8 million criminal penalty for violations of the FCPA.

The criminal complaint against OCA, which OCA agrees is true, charges that OCA won new business and rewarded sales by giving doctors and hospitals kickbacks, including consulting payments, foreign travel, lavish meals, millions of dollars in grants and free endoscopes.  For example:

  • OCA gave a hospital a $5,000 grant to facilitate a $750,000 sale;
  • OCA held up a $50,000 research grant until a second hospital signed a deal to purchase Olympus equipment;
  • OCA paid for a trip for three doctors to travel to Japan in 2007 as a quid pro quo for their hospital’s decision to switch from a competitor to Olympus; and
  • a doctor with a major role in a New York medical center’s buying decisions received free use of $400,000 in equipment for his private practice.

These and other kickbacks helped OCA obtain more than $600 million in sales and realize gross profits of more than $230 million.

The criminal complaint alleges that the improper payments happened while Olympus lacked training and compliance programs.  Unlike other medical and surgical products companies, Olympus did not create the position of compliance officer until 2009 and did not hire an experienced compliance professional until August 2010.

The DPA requires OCA to adopt several compliance measures to remedy its problems:

  • OCA must enhance its compliance training and maintain an effective compliance program;
  • OCA must maintain a confidential hotline and website for OCA employees and customers to report wrongdoing;
  • OCA’s chief executive officer and board of directors must certify annually that the program is effective; and
  • OCA must adopt an executive financial recoupment program requiring executives who engage in misconduct or fail to promote compliance to forfeit up to three years of performance pay.

Larry Mackey, a former federal prosecutor best known for trying the Oklahoma City bombing cases, has been selected as an independent monitor to evaluate and oversee Olympus’ compliance with the DPA.  He was selected by U.S. Attorney Fishman under department guidelines and approved by the Deputy Attorney General.  The DPA and monitor will remain in place for three years and can be extended for another two years if Olympus violates the DPA.

In the civil settlement, Olympus agrees to pay $310.8 million to the federal government and the states to resolve claims that Olympus’s payment of kickbacks caused false claims to be submitted to federal health care programs Medicare, Medicaid and TRICARE, and thus violated not only the AKS but also the federal and various state False Claims Acts.  The federal share of the civil settlement is $267,288,323, and Olympus will pay $43,512,053 million to participating states that contributed to the falsely claimed Medicaid payments at issue.

The civil settlement resolves a lawsuit filed by John Slowik, the former chief compliance officer of OCA, in the District of New Jersey, under the federal and various state False Claims Acts.  The acts permit whistleblowers to file suit for false claims against the government entities and to share in any recovery.  Mr. Slowik will receive $44,102, 573 million from the federal share and $7 million from the state share of the civil settlement amount.

 

Halifax Hospital Partially Settles Whistleblower Case for $85 Million

Halifax Hospital agreed to pay a record-setting $85 million to settle part of a whistleblower case pending against the company.  The James Hoyer Law Firm serves as local counsel in the case, along side the Wilbanks & Bridges Law Firm in Atlanta.  As reported in the Orlando Sentinel, the lawsuit alleges Medicare fraud and more than a decade of illegal kickbacks to doctors.

The “agreement in principle” requires that Halifax pay the settlement amount over a period of five years.

In addition, Halifax must agree to a corporate integrity and compliance program “to make sure that something like this doesn’t happen in the future,” said the court transcript.

The lawsuit was first filed in 2009 by Halifax Health employee Elin Baklid-Kunz, a former compliance officer for the 678-bed Daytona Beach hospital, where she is still employed.

The suit was filed under the federal False Claims Act which allows private citizens to file suit on behalf of taxpayers, when fraud against the government is suspected.  As a result, the bulk of the $85 million will be returned to the public coffers.  Baklid-Kunz will receive 15 percent to 25 percent of the award, for bringing the fraud to the government’s attention, as provided under the qui tam provision of the False Claims Act.

The second part of this case is slated to go to trial in July.  Those charges involve allegations that Halifax Hospital inappropriately admitted patients to their emergency room and then billed Medicare and Medicaid for their care.  That portion of the case could result in damages and penalties of up to $400 million.

UPDATE:  Halifax agreed to settle the second portion of the case for $1 million in July of 2014.

Click on the video below to watch a report by WFTV in Orlando about the settlement.