Kusserow on Compliance: DOJ moves against spine device manufacturer for paying kickbacks

The Department of Justice (DOJ) has intervened in a qui tam whistleblower case filed against SpineFrontier, Inc. and related entities and executives for alleging paying kickbacks to spine surgeons to induce use of their surgical devices. According to the complaint, spine surgeons were given over $8 million in sham “consulting” payments ostensibly for product evaluations, when in fact the payments were for use of SpineFrontier devices.

The defendants allegedly created Impartial Medical Experts LLC IME—a purported consulting company—as an entity intermediary to funnel kickbacks to spine surgeons. IME was designed to shield the defendants and spine surgeons from government scrutiny by creating a false impression that surgeons were consulting through an independent third-party entity. The Defendants generally paid “consulting” spine surgeons $500 for a cervical procedure, and $1,000 for a lumbar procedure—but only if the surgeon used SpineFrontier devices. The United States alleges that consulting spine surgeons often performed little or no work beyond implanting the devices—for which they were separately paid by insurers—and that the Defendants did not systematically collect or use feedback from consultants and paid them even when they had provided no feedback at all.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2020 Strategic Management Services, LLC. Published with permission.

Kusserow on Compliance: DOJ reports 2019 False Claims Act Recoveries of over $3B

The DOJ obtained more than $3 billion in settlements and judgments from civil cases involving fraud and false claims against the government in fiscal year 2019. Recoveries since 1986, when Congress substantially strengthened the civil False Claims Act, now total more than $62 billion. Of the more than $3 billion in settlements and judgments recovered, $2.6 billion related to the health care industry.

This was the tenth consecutive year that health care fraud settlements and judgments have exceeded $2 billion. Whistleblower, or qui tam, actions comprise a significant percentage of the False Claims Act cases that are filed. Of the $3 billion in settlements and judgments reported by the government in fiscal year 2019, over $2.1 billion arose from lawsuits filed under the qui tam provisions of the False Claims Act.

During the same period, the government paid out $265 million to the individuals who exposed fraud and false claims by filing these actions. The number of lawsuits filed under the qui tam provisions of the Act has grown significantly since 1986, with 633 qui tam suits filed this past year—an average of more than 12 new cases every week. In its news release, the DOJ noted that it had increased holding individuals accountable and cited examples of actions taken against responsible executives.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

Connect with Richard Kusserow on LinkedIn.

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Copyright © 2020 Strategic Management Services, LLC. Published with permission.

Kusserow on Compliance: Huge fraud schemes involving telemedicine and DME

– Charges against two dozen people involving over $1.2 billion

 – Administrative Action against 130 DMEs submitting $1.7 Billion in claims

The DOJ announced charges against 24 defendants—including the CEOs, COOs, and others associated with five telemedicine companies, the owners of dozens of durable medical equipment (DME) companies, and three licensed medical professionals—associated with health care fraud schemes involving more than $1.2 billion. CMS and the Center for Program Integrity (CPI) have taken adverse administrative action against 130 DME companies that had submitted over $1.7 billion in claims and were paid over $900 million. The scheme involved payment of illegal kickbacks and bribes by DME companies in exchange for the referral of Medicare beneficiaries by medical professionals working with fraudulent telemedicine companies for back, shoulder, wrist, and knee braces that were medically unnecessary.

The DOJ alleges those charged with paying doctors to prescribe DME either without any patient interaction or with only a brief telephonic conversation with patients they had never met or seen. The proceeds of the fraudulent scheme were allegedly laundered through international shell corporations and used to purchase exotic automobiles, yachts, and luxury real estate in the United States and abroad. Some of the defendants obtained patients for the scheme by using an international call center that advertised to Medicare beneficiaries and “up-sold” the beneficiaries to get them to accept numerous “free or low-cost” DME braces, regardless of medical necessity. The international call center allegedly paid illegal kickbacks and bribes to telemedicine companies to obtain DME orders for these Medicare beneficiaries. The telemedicine companies then allegedly paid physicians to write medically unnecessary DME orders. Finally, the international call center sold the DME orders that it obtained from the telemedicine companies to DME companies, which fraudulently billed Medicare. Collectively, the CEOs, COOs, executives, business owners and medical professionals involved in the conspiracy are accused of causing over $1 billion in loss.

 

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

Connect with Richard Kusserow on Google+ or LinkedIn.

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Copyright © 2019 Strategic Management Services, LLC. Published with permission.

Kusserow on Compliance: 2018 FCA enforcement and 10 tips for channeling whistleblowers internally

 New health care qui tam cases average 9 per week

$2.5 billion in recoveries from health care sector

75 percent of cases predicated by “Whistleblowers”

Whistleblowers are entitled to up to 25 percent of recoveries

The vast majority of False Claims Act cases are brought to the DOJ by “whistleblowers” (qui tam relators), under the qui tam provisions of the False Claims Act (FCA). In 2018, this continued to be the case. The DOJ’s Civil Division reported having 645 new qui tam actions initiated last year, at an average of 14 new cases per month. Of that total, 446 were health care cases—about nine a week average. Federal recoveries, including settlements and judgments, amounted to over $2.8 billion. Most of this, over $2.5 billion, related to health care and life sciences. FCA violations occur when someone knowingly submits a false or fraudulent claim for payment to the government.  The penalty for doing this is up to three times the amount of each claim, plus penalties as high as $21,563 per claim. Whistleblowers file cases with the DOJ on behalf of the United States as well as themselves and must provide all the evidence they have supporting the complaint. The DOJ decides to intervene (take over prosecution) or not. If the DOJ decides to intervene, the government takes the lead in prosecuting the case; and if not, the relator may proceed with the prosecution on their own in federal court.  The relator is entitled to 15 to 25 percent of the government’s recovery, plus attorneys’ fees and expenses.

The recovery results in 2108 marked the ninth consecutive years where recoveries have exceeded $2 billion. Of the health care recoveries, more than three quarters of that sum were as result of qui tam cases. Health care and life sciences settlements involved drug and device manufacturers, hospitals, Medicare Advantage plans, pharmacies, and laboratories. The largest settlement, for $625 million, was with AmerisourceBergen Corp. and its subsidiaries, and it involved resolution of allegations that it repackaged and resold cancer drugs to profit from “overfill” in the original packaging. The other major settlements also involve pharmaceutical manufacturers. In those cases, the FCA was violated as result of payment of kickbacks to induce the flow of business.  The largest case among providers involved an independent physician association that entered into a $270 million settlement with another case resulting in a $216 million settlement with the former hospital chain, Health Management Associates.

10 Tips: Channeling Whistleblowers Internally 

  1. Review/update hotline-related polices/procedures (confidentiality, anonymity, non-retaliation, duty to report, etc.)
  2. Promote the reporting of wrongdoing (newsletter, intranet, training programs, etc.)
  3. Find ways to provide feedback so that employees know reporting is taken seriously
  4. Consider engaging experts to evaluate compliance communication channels effectiveness
  5. Allegations of potential violations of law or regulations must be promptly investigated.
  6. Ensure that individuals are trained and competent to conduct prompt investigations.
  7. All cases where investigation indicates potential violations, disclose promptly
  8. Take appropriate disciplinary action against identified wrongdoers
  9. Understand CMS and OIG self-disclosure protocols that may avoid FCA investigation
  10. Ensue investigations finding of potential violations of law are promptly disclosed to the DOJ

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2019 Strategic Management Services, LLC. Published with permission.