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Kickbacks and Medically Unnecessary Treatments: Five Major Qui Tam Settlements from May 2024
Wednesday, June 5, 2024

In May, the U.S. Department of Justice (DOJ) and U.S. Attorneys’ Offices announced several significant False Claims Act (FCA) settlements resolving qui tam whistleblower lawsuits.

Under the FCA’s qui tam provisions, a crucial tool in combating healthcare fraud, whistleblowers have the power to file suits on behalf of the federal government if they possess the knowledge of an individual or company defrauding the government. The government may choose to intervene and take over the suit, but if a qui tam lawsuit results in a successful settlement, the whistleblower is eligible to receive between 15-30% of the monies collected.

The settlements announced in May cover a wide range of alleged misconduct that violates the FCA, including cases concerning kickbacks and the billing of federal healthcare programs for medically unnecessary treatments. Each settlement represents a victory in the ongoing battle against fraud.

Each of these settlements resulted from a qui tam whistleblower suit, a legal term meaning to bring a lawsuit on behalf of the government. These successful settlements underscore the importance of whistleblowers in uncovering these alleged fraud schemes.

$27 Million Settlement with Daniel Hurt for Alleged Medicare Fraud Relating to Cancer Genomic Tests

On May 24, the U.S. Attorney’s Office for the Southern District of Florida announced that Daniel Hurt, a Florida businessman, agreed to pay $27 million to settle charges that he and his companies violated the FCA by billing Medicare for cancer genomic tests that were not medically necessary and were procured through illegal kickbacks, in violation of the Anti-Kickback Statute.

The government alleges that “from January 2019 to November 2021, Hurt conspired with telemarketing agents to solicit Medicare beneficiaries for ‘free’ CGx tests; with telemedicine providers to ‘prescribe’ CGx tests that were not medically necessary; with reference laboratories to conduct the CGx tests and with billing laboratories and a hospital to submit claims for payment to the Centers for Medicare and Medicaid Services.”

The settlement stems from a qui tam suit filed by Robert Gerstein, who worked for Hurt running the billing operations for CGx tests. As his share of the recoveries, Gerstein is set to receive $4.7 million.

$24.3 Million Settlement with Cape Cod Hospital for Allegedly Failing to Comply with Medicare Rules for Cardiac Procedures

On May 16, the DOJ announced that Cape Cod Hospital agreed to pay $24.3 million to resolve allegations that it billed Medicare for transcatheter aortic valve replacement (TAVR) procedures that failed to comply with Medicare rules dictating the proper evaluation of patient suitability for the procedures.

According to the government, “From Nov. 1, 2015, through Dec. 31, 2022, Cape Cod Hospital knowingly submitted hundreds of claims to Medicare for TAVR procedures that did not comply with the applicable Medicare requirements. In some instances, not enough physicians examined a patient’s suitability for the procedure. In other instances, the physicians failed to document and share their clinical judgment with the medical team responsible for the TAVR procedure.”

The settlement stems from a qui tam lawsuit filed by Richard Zelman, a physician formerly employed by Cape Cod Hospital. Dr. Zelman will receive approximately $4.36 million as his share of the recovery.

$12 Million Settlement with Innovasis Inc. for Alleged Kickbacks to Spine Surgeons

On May 29, the DOJ announced a $12 million settlement with spinal device manufacturer Innovasis Inc. and senior executives to resolve allegations that they illegally paid kickbacks to spine surgeons to induce their use of Innovasis products in procedures performed on Medicare beneficiaries.

According to the DOJ, “the improper remuneration was allegedly provided in the form of consulting fees, intellectual property acquisition, and licensing fees, registry payments and performance shares in Innovasis, as well as travel to a luxury ski resort, lavish dinners, and holiday parties for surgeons, their office staff and family members.”

The settlement stems from a qui tam suit filed by Robert Richardson, a former Regional Sales Director for Innovasis. As a result of his courageous action, Richardson is set to receive $2.2 million, a significant reward for his efforts in uncovering the illegal activities of his former employer.

$10.1 Million Settlement with RiverSpring for Allegedly Failing to Provide Required Services in Managed Long-Term Care Plan

On May 23, the U.S. Attorney’s Office for the Southern District of New York announced a $10.1 million settlement with two New York not-for-profit corporations (Riverspring) that administer a Managed Long-Term Care Plan for Medicaid beneficiaries. The settlement resolves allegations that Riverspring billed Medicaid for months in which it failed to provide or adequately document certain long-term care services.

“RiverSpring collected millions of dollars in Medicaid payments to provide long-term care services as part of its managed care plan, but in many cases either failed to deliver these services or failed to maintain adequate documentation showing that it did so,” said U.S. Attorney Damian Williams.

The settlement resolves a qui tam lawsuit filed by a whistleblower under seal. The whistleblower’s share of the settlement was not disclosed.

$4.2 Million Settlement with Elara Claring for Allegedly Billing Medicare for Ineligible Hospice Patients

On May 1, the DOJ announced that Elara Caring had agreed to pay $4.2 million to settle allegations that it billed Medicare for the care of hospice patients in Texas who were not terminally ill.

“Elara Caring’s Texarkana, Texas, location, which previously operated as CIMA Hospice, knowingly submitted false claims for hospice services provided to patients who were ineligible for the hospice benefit because they were not terminally ill,” the government alleges.

The settlement stems from a qui tam lawsuit filed by Aneko Jackson, a former Elara Caring employee. Jackson is set to receive $672,000 in connection with the settlement.

Conclusion

As these major settlements highlight, healthcare fraud remains a significant threat to the healthcare system. In the 2023 Fiscal Year, qui tam whistleblower cases resulted in more than $2.3 billion in settlements and judgments. Of that $2.3 billion, more than $1.5 billion were connected to healthcare fraud, underscoring the financial burden and potential harm caused by fraudulent practices.

This article was authored by Geoff Schweller

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