Tag Archives: Medicare and Medicaid Anti-Kickback Statute

Pharmaceutical Company to Pay $27.6 Million to Settle Allegations Involving False Billings to Federal Health Care Programs

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Pharmaceutical manufacturer Teva Pharmaceuticals USA Inc. and a subsidiary, IVAX LLC, have agreed to pay the government and the state of Illinois $27.6 million for allegedly violating the False Claims Act by making payments to induce prescriptions of an anti-psychotic drug for Medicare and Medicaid beneficiaries .  Teva Pharmaceuticals USA is located in North Wales, Pa., and IVAX LLC is a Florida company.

“The Department of Justice is committed to ensuring that pharmaceutical manufacturers who make payments to doctors to influence prescribing decisions are held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “Schemes such as the one alleged in this case undermine the health care system and take advantage of vulnerable patients.”

“Pharmaceutical companies must not be allowed to improperly influence physicians’ decisions in prescribing medication for their patients,” said U.S. Attorney Zachary T. Fardon for the Northern District of Illinois.  “Instead, those decisions must be made solely on the basis of the patient’s best medical interests.”

The settlement resolves allegations that Teva and IVAX made payments to an Illinois physician, Dr. Michael J. Reinstein, to induce the prescription of  generic clozapine, an anti-psychotic medication.  Clozapine has serious potential side effects and is generally considered a drug of last resort, particularly for elderly patients.  While clozapine has been approved for treatment-resistant forms of schizophrenia, it is also reported to cause numerous side effects, including a potentially deadly decrease in white blood cells, seizures, inflammation of the heart muscle and increased mortality in elderly patients.  The United States alleged that the payment scheme involving Reinstein began in August 2003, when Reinstein agreed to switch his patients to generic clozapine if IVAX, which was subsequently acquired by Teva Pharmaceuticals’ parent corporation, agreed to pay Reinstein $50,000 under a one-year “consulting agreement” and to provide other benefits to Reinstein, in violation of the federal Medicare and Medicaid Anti-Kickback Statute.  In addition to direct payments to Reinstein, IVAX allegedly also provided all-expenses paid trips to Miami for Reinstein, his wife and several of his employees.  Reinstein quickly became the largest prescriber of generic clozapine in the country, and prescribed the drug for many elderly patients.  Allegedly, the payments and other forms of remuneration from IVAX and later Teva Pharmaceuticals continued for many years, and resulted in the submission of thousands of false claims to the Medicare Part D and Illinois Medicaid programs.

The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid and other federally funded programs.  The Anti-Kickback Statute is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient.

On Nov. 15, 2012, the United States filed a civil action against Reinstein in United States v. Reinstein , alleging that he violated the False Claims Act as a result of his involvement in the payment scheme with Teva and IVAX.   The civil action against Reinstein remains pending in the Northern District of Illinois.

The government’s settlement of these allegations illustrates its 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 billion through False Claims Act cases, with more than $13.4 billion of that amount recovered in cases involving fraud against federal health care programs.

The settlement with Teva Pharmaceuticals and IVAX was the result of a coordinated effort by the U.S. Attorney’s Office for the Northern District of Illinois, the Commercial Litigation Branch of the Justice Department’s Civil Division, the Department of Health and Human Services Office of Inspector General and the Federal Bureau of Investigation.

 

The claims resolved by this settlement are allegations only, and there has been no determination of liability.

Government Intervenes in Lawsuit Against Tenet Healthcare Corp. and Georgia Hospital Owned by Health Management Associates Inc. Alleging Payment of Kickbacks

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The government has intervened in a False Claims Act lawsuit against  Tenet Healthcare Corp. (Tenet) and four of its hospitals in Georgia and South Carolina, as well as a hospital in Monroe, Ga., owned by Health Management Associates Inc. (HMA), alleging that the hospitals paid kickbacks to obstetric clinics serving primarily undocumented Hispanic women in return for referral of those patients for labor and delivery at the hospitals.  The hospitals then billed the Medicaid programs in Georgia and South Carolina for the services provided to the referred patients and, in some instances, also obtained additional Medicare reimbursement based on the influx of low-income patients.  Tenet and HMA are two of the largest owner/operators of hospitals in the United States.  HMA was acquired by Community Health Systems last month.  The government also is intervening against the clinics and related entities known as  Hispanic Medical Management d/b/a Clinica de la Mama.

“The Department of Justice is committed to ensuring that health care providers who pay kickbacks in return for patient referrals are held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “Schemes such as this one corrupt the health care system and take advantage of vulnerable patients.”

“My office has made the investigation of health care fraud a priority,” said U.S. Attorney for the Middle District of Georgia Michael J. Moore.  “In a time when too many people were struggling to get health care for themselves and their children, Tenet and these hospitals plundered a system set up for those truly in need.  This kind of scheme drives up costs for everyone, not just the vulnerable patients and groups like those targeted in this case.”

The lawsuit alleges that four Tenet hospitals, Atlanta Medical Center,  North Fulton Regional Hospital, Spalding Regional Hospital and Hilton Head Hospital in South Carolina, and one HMA facility,  Walton Regional Medical Center (since renamed Clearview Regional Medical Center), paid kickbacks to  Hispanic Medical Management d/b/a Clinica de la Mama (Clinica) and related entities in return for Clinica’s agreement to send pregnant women to their facilities for deliveries paid for by Medicaid, in violation of the federal Medicare and Medicaid Anti-Kickback Statute.  The kickbacks were disguised as payments for a variety of services allegedly provided by Clinica.

The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid and other federally funded programs.  The Anti-Kickback Statute is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient.

“Investigations such as these are a high priority for the FBI, and we are determined to hold accountable providers that enrich themselves at the expense of government programs and damage the public trust,” said FBI Assistant Director Ronald T. Hosko.  “The FBI is dedicated to preventing and combating all forms of health care fraud; working with federal, state and local partners to effectively resolve allegations and engaging with the public to identify potential schemes.”

The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government when they believe that defendants submitted false claims for government funds and to receive a share of any recovery.  The False Claims Act also permits the government to intervene in such lawsuits, as it has done in this case.  The lawsuit is pending in  the Middle District of Georgia .

The government’s intervention in this matter illustrates its 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 billion through False Claims Act cases, with more than $13.4 billion of that amount recovered in cases involving fraud against federal health care programs.

These matters were investigated by the Commercial Litigation Branch of the Justice Department’s Civil Division, the Fraud Section of the department’s Criminal Division, the U.S. Attorney’s Offices for the Middle and Northern Districts of Georgia, the Department of Health and Human Services Office of Inspector General, the Federal Bureau of Investigation and the Office of the Attorney General for the State of Georgia.

The case is captioned United States ex rel. Williams v. Health Mgmt. Assocs. Inc., Tenet Healthcare, et al., No. 3:09-CV-130 (M.D. Ga.).

The claims asserted against Tenet, the HMA facility and Clinica are allegations only, and there has been no determination of liability.