Category Archives: DKS

Government Settles False Claims Act Allegations Against Kansas Cancer Treatment Facility and Its Owner

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Hope Cancer Institute, a cancer treatment facility in Kansas, and Dr. Raj Sadasivan, the owner of Hope Cancer Institute, have agreed to pay $2.9 million to resolve allegations that they violated the False Claims Act by submitting claims to Medicare, Medicaid and the Federal Employee Health Benefits Program for drugs and services that were not provided to beneficiaries, the Department of Justice announced today.

“Billing Medicare and Medicaid for drugs that are not provided to beneficiaries contributes to the soaring costs of health care,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.   “Providers will be investigated aggressively and held accountable for falsely billing federal health care programs.”

The settlement resolves allegations that, between 2007 and 2011, Sadasivan and Hope Cancer Institute submitted claims to federal health benefit programs for the chemotherapy drugs Rituxan, Avastin and Taxotere that were not provided to federal health care beneficiaries.   Sadasivan allegedly instructed the employees of Hope Cancer Institute to bill for a predetermined amount of cancer drugs at certain dosage levels, when lower dosages of these drugs were actually provided to beneficiaries.   As a result of these instructions, Hope Cancer Institute submitted inflated claims to federal health care programs for drugs that were not actually provided to patients.

“Health care providers that try to make a quick buck by billing taxpayers for services never provided will instead pay a high price for their greed-fueled fraud,” said Gerald T. Roy, Special Agent in Charge, U.S. Department of Health and Human Services Office of Inspector General.   “We are dedicated to investigating and prosecuting these types of deceptive schemes.”

The settlement resolves a lawsuit filed by Krisha Turner, Crystal Dercher and Amanda Reynolds, former employees of Hope Cancer Institute, under the qui tam, or whistleblower,provisions of the False Claims Act, which allow private citizens with knowledge of false claims to file suit on behalf of the government and to share in any recovery.

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius.   The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.   Since January 2009, the Justice Department has recovered a total of more than $19.1 billion through False Claims Act cases, with more than $13.6 billion of that amount recovered in cases involving fraud against federal health care programs.

The settlement with Sadasivan and Hope Cancer Institute was the result of a coordinated effort among the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Kansas and the U.S. Department of Health and Human Services Office of Inspector General.   The False Claims Act suit was filed in the U.S. District Court for the District of Kansas and is captioned United States ex rel. Turner et al. v. Hope Cancer Institute, et al.

The claims settled by this agreement are allegations only; there has been no determination of liability.

CareFusion to Pay the Government $40.1 Million to Resolve Allegations That Include More Than $11 Million in Kickbacks to One Doctor

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CareFusion Corp. has agreed to pay the government $40.1 million to settle allegations that it violated the False Claims Act by paying kickbacks and promoting its products for uses that were not approved by the Food and Drug Administration, the Justice Department announced today.  CareFusion, a California-based medical technology company, develops, manufactures and sells pharmaceutical products, including products sold under the trade name ChloraPrep.

“When companies pay kickbacks to doctors, especially doctors involved in setting standards for the health care industry, they undermine the integrity of the health care system,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “Corrupting the standard-setting process through kickbacks can affect the health care treatment choices that doctors and hospitals may make for patients.”

The settlement resolves allegations that, under agreements entered into in 2008 by CareFusion’s predecessor, CareFusion paid $11.6 million in kickbacks to Dr. Charles Denham while Denham served as the co-chair of the Safe Practices Committee at the National Quality Forum, a non-profit organization that reviews, endorses and recommends standardized health care performance measures and practices.  The government contends that the purpose of those payments was to induce Denham to recommend, promote and arrange for the purchase of ChloraPrep by health care providers.  ChloraPrep has been approved by the Food and Drug Administration for the preparation of a patient’s skin prior to surgery or injection.

This settlement also resolves allegations that, during the period between September 2009 and August 2011, CareFusion knowingly promoted the sale of ChloraPrep for uses that were not approved by the Food and Drug Administration, some of which were not medically accepted indications, and made unsubstantiated representations about the appropriate uses of ChloraPrep.

“Health care fraud drives up the cost of health care and jeopardizes the strength of our health care system,” said U.S. Attorney for the District of Kansas Barry Grissom.  “This case demonstrates that our fight against health care fraud is helping to protect all Americans, including the elderly, the disabled and the most vulnerable among us.”

The settlement resolves a lawsuit filed by Dr. Cynthia Kirk, a former vice president of regulatory affairs for the Infection Prevention Business Unit of CareFusion, under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens with knowledge of false claims to file suit on behalf of the government and to share in any recovery.  The whistleblower’s, or relator’s, share in this case is $3.26 million.

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $17 billion through False Claims Act cases, with more than $12.2 billion of that amount recovered in cases involving fraud against federal health care programs.

The settlement with CareFusion was the result of a coordinated effort among the Commercial Litigation Branch of the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Kansas, the U.S. Department of Health and Human Services Office of Inspector General and the Food and Drug Administration Office of the Chief Counsel.

The lawsuit is captioned United States ex rel. Kirk v. CareFusion et al., No. 10-2492 (D. Kan.)  The claims resolved by the settlement are allegations only; there has been no determination of liability.

Former Department of Defense Contractor Sentenced to 30 Months in Prison for Smuggling Kickback Proceeds from Afghanistan to the United States

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A former employee of a Department of Defense contracting company at Bagram Airfield, Afghanistan, was sentenced today to serve 30 months in prison for attempting to smuggle $150,000 in kickback proceeds he received for steering U.S. government subcontracts to an Afghan company, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Barry Grissom of the District of Kansas.

 Donald Gene Garst, 51, of Topeka, Kan., was sentenced by U.S. District Judge Julie A. Robinson in Topeka.  In addition to his prison term, Garst was sentenced to serve one year of supervised release and was ordered to pay a fine of $52,117.  The department previously forfeited the $150,000 Garst had attempted to smuggle into the United States.

Garst pleaded guilty on Nov. 9, 2012, to a one-count information charging him with bulk cash smuggling.  According to court documents, Garst was employed by a private U.S. company that was contracted by the U.S. government and its armed forces at Bagram Airfield from January 2009 to May 2011.  Garst was involved in identifying, evaluating and monitoring subcontracts awarded to Afghan companies by his employer, and he used his position to meet executives of an Afghan construction company called Somo Logistics.  Garst then entered into an agreement with the Afghans under which he would receive kickback payments on a contract-by-contract basis in return for treating Somo Logisitcs favorably in the contracting process.

In December 2010, Garst accepted a kickback for $60,000 on the first subcontract awarded to Somo Logistics.  The subcontract was for the term lease of heavy equipment meant to be used for construction on Bagram Airfield.  Garst hand-carried approximately $20,000 of the kickback proceeds into the United States, and he received the remainder via a series of structured wire transfers from Somo Logistics executives.

In May 2011, Garst accepted a $150,000 kickback for a second subcontract for the lease of heavy construction equipment.  Garst shipped the $150,000 in cash to the United States, and his failure to declare the value of the shipment was discovered by law enforcement.

Garst had further agreed to receive $400,000 on a third subcontract, but his scheme was discovered by law enforcement before he could receive that payment.

This case is being prosecuted by Assistant U.S. Attorney Jared Maag and Trial Attorney Wade Weems of the Criminal Division’s Fraud Section.  The case was investigated by Special Agents with the Army Criminal Investigations Division and the Defense Criminal Investigative Service, with assistance from the Special Inspector General for Afghanistan Reconstruction and the FBI.

Indictment: Kidney Dialysis Patients Received Misbranded Drugs

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TOPEKA, KAN. – A Tennessee pharmacist is charged with substituting a cheaper drug imported from China for the iron sucrose that the Federal Drug Administration has approved for kidney dialysis patients, U.S. Attorney Barry Grissom said today.

Robert Harshbarger, Jr., 53, Kingsport, Tenn., doing business as American Inhalation Medication Specialists, Inc., is charged with one count of selling misbranded drugs, one count of mail fraud and five counts of health care fraud.

The indictment alleges that as a result of fraud by Harshbarger kidney dialysis patients treated by Kansas Dialysis Services, L.C., received iron sucrose that had not been certified by the FDA to meet quality and safety standards.

“Although there are no reports of patient harm associated with the drugs that are alleged to be misbranded in this indictment, patient health was put at risk,” said U.S. Attorney Barry Grissom. “The FDA cannot assure the safety and effectiveness of products that are not FDA approved and come from unknown sources and foreign locations, or that may not have been manufactured under proper conditions. These unknowns put patients’ health at risk because of uncertainty concerning the product’s content, purity and source.”

Grissom said there is no reason for current or former patients of Kansas Dialysis to be concerned at this time. The events outlined in the indictment ended in 2009. Any significant iron deficiencies would have been addressed during the course of a patient’s dialysis treatments. Nevertheless, any questions should be addressed to a physician, Grissom said.

The indictment alleges that Harhbarger’s company, American Inhalation Medication Specialists, Inc., of Kingsport, Tenn., received more than $875,000 from Kansas Dialysis and more than $845,000 from health care benefit programs including Medicare and Medicaid for misbranded iron sucrose sold from 2004 to 2009. Harshbarger misrepresented the iron sucrose drug as Venofer, which is the only iron sucrose drug approved by the FDA for both pre-dialysis and post-dialysis patients.

Harshbarger purchased iron sucrose from Chinese companies including Qingdao Shenbang Chemical Company in Qingdao, China, and Shanghai Rory Fine Chemicals Co., Ltd., in Shanghai, China. The iron sucrose from China was cheaper than purchasing Venofer.

If convicted, Harshbarger faces a maximum penalty of 20 years in federal prison and a fine up to $250,000 on the mail fraud count; a maximum penalty of 10 years and a fine up to $250,000 on each of the health care fraud counts; and a maximum penalty of three years and a fine up to $250,000 on the charge of selling a misbranded drug. The Food and Drug Administration and the Dept. of Health and Human Services, Office of Inspector General, investigated. Assistant U.S. Attorney Tanya Treadway is prosecuting.

OTHER INDICTMENTS

Two men who were executives of the Brooke Companies, a now defunct insurance franchising business in Kansas, have been indicted on federal financial fraud charges.

Robert D. Orr, 59, Denver, Colo., and Leland G. Orr, 50, Phillipsburg, Kan., are charged with one count of conspiracy to defraud the Securities and Exchange Commission and three counts of making false statements in filings to the SEC. In addition, Robert Orr is charged with two more counts of making false statements in SEC filings and one count of bankruptcy fraud.

The Orrs were executives of Brooke Corporation, a holding company headquartered in Overland Park and Phillipsburg, Kan., that was engaged primarily in insurance franchising, insurance agency financing and banking. Brook Corporation owned a majority interest in Brooke Capital, Aleritas and Brooke’s Savings Bank. Brooke Capital sold insurance agency franchises and provided bookkeeping and other support services for franchises. Aleritas sold the majority of loans it made to franchisees and typically remained responsible for loan servicing. The companies were known collectively as the Brooke Companies.

The indictment alleges that in 2007 and 2008 the Brooke Companies experienced increasingly dire liquidity conditions and rapidly declining franchise financial health. In attempting to conceal financial problems, Brooke Companies’ management misrepresented the number of viable franchises, the health of Aleritas’ loan portfolio and other material financial information to the SEC, investors and lenders. They conspired to present a false aggregate picture of the Brooke Companies’ financial condition and thereby to obtain money, dividend payments and cash transfers for themselves.

If convicted, they face a maximum penalty of 20 years in federal prison and a fine up to $5 million on each count of making a false statement in SEC filings; and a maximum of five years and a fine up to $250,000 on each of the other counts. The FBI investigated. Assistant U.S. Attorney Mike Warner is prosecuting.

Bryan K. Carter, 32, Topeka, Kan., is charged with unlawful possession of a firearm after a felony conviction. The crime is alleged to have occurred Dec. 13, 2011, in Shawnee County, Kan.

If convicted, he faces a maximum penalty 10 years and a fine up to $250,000. The Bureau of Alcohol, Tobacco, Firearms and Explosives investigated. Assistant U.S. Attorney Duston Slinkard is prosecuting.

Omar Romero Salgado, 18, currently in custody in the Shawnee County Jail, is charged with one count of possession with intent to distribute methamphetamine, one count of possession with intent to distribute Clonazepam, one count of possession of a firearm in furtherance of drug trafficking and one count of possession of a stolen firearm. The crimes are alleged to have occurred Oct. 30, 2012, in Shawnee County, Kan.

If convicted, he faces a maximum penalty of 20 years and a fine up to $1 million on the methamphetamine charge; a maximum penalty of five years and a fine up to $250,000 on the Clonazepam charge; a penalty of not less than five years and a fine up to $250,000 on the charge of possessing a firearm in furtherance of drug trafficking; and a maximum penalty of 10 years and a fine up to $250,000 on the charge of possession of a stolen firearm. The FBI investigated. Assistant U.S. Attorney Jared Maag is prosecuting.

Xavier Patrick McCullough, 24, currently in custody in the Shawnee County Jail, and Ryan Cole Palmer, 25, currently in custody in the Shawnee County Jail, are charged with one count of possession with intent to distribute marijuana, one count of possession with intent to distribute methamphetamine and one count of possession of a firearm in furtherance of drug trafficking.

If convicted, they face a maximum penalty of 20 years and a fine up to $1 million on the methamphetamine charge; not less than five years and a fine up to $250,000 on the firearm charge; and a maximum penalty of five years and a fine up to $250,000 on the marijuana charge. The Topeka Police Department and the FBI investigated. Assistant U.S. Attorney Jared Maag is prosecuting.

In all cases, defendants are presumed innocent until and unless proven guilty. The indictments merely contain allegations of criminal conduct.