The Department of Justice (DOJ) obtained $2.8 billion in settlements and judgements from False Claims Act civil cases in fiscal year 2018. Of this amount, $2.5 billion, (89%), involved recoveries from the health care industry, including drug and medical device manufacturers, managed care providers, hospitals, pharmacies, hospice organizations, laboratories, and physicians. The DOJ noted in its press release “This is the ninth consecutive year that the Department’s civil health fraud settlements and judgments have exceeded $2 billion.” In addition to these federal recoveries, the DOJ was instrumental in recovering additional millions of dollars for state Medicaid programs.
More than $2.1 billion of the $2.8 billion recovered arose from lawsuits brought by whistleblowers under the qui tam provisions of the False Claims Act. Whistleblowers filed 645 qui tam suits in 2018 – an average of 12 new cases every week and the government paid $301 million to individual whistleblowers in 2018. “Whistleblowers have played a vital role in unmasking fraudulent schemes that might otherwise evade detection,” noted DOJ Assistant Attorney General Jody Hunt.
The largest recoveries came from the drug and medical device industry, though substantial recoveries also came from institutional and individual health care providers. Health Care Partners Holdings LLC (d/b/a DaVita Medical Holdings LLC) paid $270 million for providing inaccurate information that caused Medicare Advantage Organizations to receive inflated Medicare payments including “one-way” chart reviews. Hospital chain Health Management Associates paid $216 million for billing for more costly inpatient services that should have been billed as observation or outpatient services, paying illegal remuneration to physicians in return for patient referrals to HMA hospitals and inflating claims for emergency department facility fees. William Beaumont Hospital, a Detroit regional hospital system, paid $84.5 million for improper relationships with eight referring physicians intended to induce patient referrals.
The DOJ also used the FCA to deter and redress fraud by individual providers. Neurosurgeon Dr. Sonjay Fonn, his fiancé and their professional corporations paid $5.5 million to resolve allegations that Dr. Fonn performed spinal fusion surgery using implants for which his fiancé received commissions that benefitted him personally in the form of lavish purchases including a yacht and home improvements. Prime Healthcare Services and its CEO paid $65 million to settle allegations that 14 Prime hospitals knowingly submitted false claims by admitting patients who required less costly outpatient care, but billing for more expensive patient diagnoses than the patients had.
As the DOJ press release noted: “As some of the matters described illustrate, the Department continued to place great importance on enforcing the safeguards contained within the Anti-Kickback Statute (AKS). This law was enacted to ensure that clinical decisions and medical services are provided to patients based on their medical needs and not in the improper financial considerations of providers. Congress has made clear that claims submitted to federal health care programs in violation of the AKS are ‘false’ claims for purposes of the False Claims Act.”
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