8 years of illegal kickbacks costs Hospice Plus $12M

A group of hospices owned by Curo Health Services and operating under the Hospice Plus brand agreed to pay over $12 million to resolve allegations that they paid kickbacks in exchange for patient referrals in violation of the False Claims Act (31 U.S.C. §3729). The scheme came to light after several whistleblowers filed qui tam lawsuits on behalf of the United States, consolidated as U.S. ex rel. Capshaw v. White. The United States had previously partially intervened in the lawsuit against the corporate defendants for purpose of settlement; the suit remains pending against two former Curo executives, and the United States requested permission to intervene in the remainder.

Kickbacks were allegedly paid to (1) American Physician Housecalls, a physician house call company in the form of sham loans, free equity interest in another entity, stock dividends, and free rental space; and (2) to medical providers, including doctors and nurses, in the form of cash, gift cards, and other valuable items. According to the consolidated whistleblower complaints, the house call company allegedly received kickbacks from 2007 through 2012, while providers allegedly received payments from 2007 through 2014.

The involved hospices primarily operate in and around Dallas, Texas, and were first known as Hospice Plus, Goodwin Hospice, and Phoenix Hospice. The three companies were purchased by Curo Health Services in 2010 and consolidated under the Hospice Plus brand.

Webinar provides multiple perspectives on FCA cases

To avoid federal False Claims Act (FCA) (31 U.S.C. §3729 et seq.) liability, providers should implement an effective compliance program, stay ahead of the government’s investigation of possible FCA violations, and fix problems first. In a Health Care Compliance Association (HCCA) webinar entitled, “False Claims Act Cases—Perspectives from Both Sides of the Aisle,” Rachel V. Rose, principal at Rachel V. Rose—Attorney at Law, PLLC, and Sean McKenna, shareholder at Greenberg Traurig LLP, provided an overview of the process for filing federal FCA complaints and how to respond to investigations and lawsuits under the FCA.

Complaints

Qui tam relators file their complaints under seal, on behalf of the government. The Department of Justice (DOJ) has 60 days to investigate and decide whether to intervene, which happens only about 10 percent of the time. Even then, the government will prosecute only the strongest aspects of the case. The presenters warned that relators should use “an abundance of caution” when discussing an FCA case or the underlying allegations with anyone other than the whistleblower’s attorney or the government agents assigned to the case, as “breaking the seal” can result in dismissal or sanctions.

False claims

The type of false claim that most frequently leads to FCA liability is a claim for services not provided. Other categories of false claims include legally false claims (express), legally false claims by implied certification, and reverse false claims. In United Health Services, Inc. v. United States ex rel. Escobar, (2016), the U.S. Supreme Court upheld the implied certification theory and relied on whether the claim was material to payment, what McKenna called a “groundbreaking approach” (see Implied certification liability confirmed, limited to material compliance violations, Health Law Daily, June 16, 2016).

Since November 2, 2015, the range of penalties for violating the FCA increased from $5,500-$11,000 to $10,781-$21,562, plus treble damages and the relator’s attorney fees. FCA violations can also lead to exclusion, “the death penalty for health care providers.” Exclusion applies only to conduct from the past 10 years (42 C.F.R. Sec. 1001.901(c); see HHS OIG’s exclusion authority loosens, allows more discretion, Health Law Daily, January 12, 2017).

In parallel proceedings, simultaneous civil/criminal/administrative investigation of the same defendants occurs. It can be federal and state/local or multi-district. Not every case is appropriate for parallel proceedings, however. Examples of common parallel matters include procurement and government program fraud, health care fraud, internet pharmacies, and antitrust investigations.

Yates memo

The past several years in health care fraud and abuse prosecutions have seen an increased focus on individual actors such as executives, as reflected in a September 9, 2015 memo from former acting attorney general Sally Yates, known as the “Yates Memo.” The Memo emphasized the DOJ’s commitment to combat fraud “by individuals” and recommended that: (1) to qualify for a cooperation credit, a corporation must provide facts relating to the individuals responsible for the misconduct; (2) investigations should focus on individuals from the inception of the investigation; (3) culpable individuals should not be released from liability absent extraordinary circumstances; and (4) DOJ attorneys should not resolve matters with a corporation without a clear plan to resolve related individual case.

Best practices

If an FCA investigation occurs, providers should evaluate all liability (civil, criminal, administrative, state, licensure, and private), determine if anyone needs separate counsel or has talked to the government, preserve documents, and compile the right team, including consultants, billing and coding experts, and statisticians.

Owner of compounding company at the center of the 2012 meningitis outbreak acquitted of murder

A Boston jury convicted Barry Cadden, the owner and head pharmacist of the New England Compounding Center (NECC), of racketeering and mail fraud in connection with the 2012 nationwide fungal meningitis outbreak but acquitted him of 25 second-degree murder charges. His sentencing is scheduled for June 21, 2017; he faces a statutory maximum sentence of up to 20 years’ imprisonment on each of the mail fraud and racketeering counts.

Outbreak. In September 2012, the Centers for Disease Control and Prevention (CDC) began investigating a multistate outbreak of fungal meningitis and other infections among patients who received contaminated preservative-free methylprednisolone acetate (MPA) steroid injections from NECC. The CDC reported that 753 patients in 20 states were diagnosed with a fungal infection after receiving injections of NECC’s MPA. Of those 753 patients, the CDC reported that 64 patients in nine states died.

Indictment. In December 2014, the U.S. Attorney’s Office in Massachusetts announced a 131-count federal criminal indictment in connection with the outbreak. Cadden and NECC’s supervisory pharmacist, Glenn A. Chin, were charged with 25 acts of second-degree murder in Florida, Indiana, Maryland, Michigan, North Carolina, Tennessee and Virginia. Twelve other individuals associated with NECC, including six other pharmacists, the director of operations, the national sales director, an unlicensed pharmacy technician, two of NECC’s owners, and one other individual were charged with additional crimes.

Prosecutors alleged that Cadden directed and authorized the shipping of contaminated MPA nationwide. In addition, he authorized the shipping of drugs before test results confirmed their sterility, failed to notify customers of nonsterile results, and compounded drugs with expired ingredients. NECC also used fictional and celebrity names on fake prescriptions to dispense drugs.

 

Home health owner/operator pleads guilty to Texas-sized Medicaid fraud

Billed as the largest provider attendant services (PAS) fraud in Texas history, the owner/operator of five Houston-area home health agencies pleaded guilty in a $17 million fraud conspiracy case, the last conspirator in the scheme to plead guilty. The owner/operator pleaded guilty to two counts of conspiring to defraud Medicare and the Texas Medicaid-funded home and community-based service and primary home care programs and one count of conspiring to launder money. His sentencing is scheduled for June 22, 2017.

The owner/operator, whose co-conspirators included his daughter and other family members, admitted to the following:

1. obtaining patients for the home health agencies by paying illegal kickbacks to patient recruiters and office employees;
2. paying cash, checks, Western Union, and Moneygram funds to Medicare and Medicaid patients for receiving services from the home health agencies in exchange for using their Medicare and Medicaid numbers to bill for home health and PAS services;
3. paying patients for recruiting other Medicaid and Medicaid patients to the home health agencies;
4. paying physicians illegal kickbacks for referring and certifying Medicare and Medicaid patients for home health and PAS services; and
5. using fraudulently-obtained money from Medicare and Medicaid to pay the illegal kickbacks to promote the conspiracies and to ensure that they would continue.

Over $17 million in fraudulent claims were submitted to Medicare and Medicaid and the conspirators received approximately $16 million in payments from the programs.