Policy & Regulation News

July 10: Week That Was in Healthcare Fraud and Malpractice

By Jacqueline DiChiara

- Here is a general roundup of the past week’s developments in healthcare fraud and malpractice, as reported by the Department of Justice and the Office of Inspector General. The crimes reported below result in multiple millions of dollars in healthcare fraud and the possibility of extensive prison time.

healthcare fraud and abuse

$54M settlement for allegedly underpaying Medicaid rebates

According to the Justice Department, this week, biopharmaceutical company AstraZeneca LP consented to pay the United States and participating states $46.5 million, not including interest, to resolve claims that it intentionally underpaid rebates owed through the Medicaid Drug Rebate Program.

In conjunction with similar allegations, another drug company, Cephalon Inc, owned by Teva Pharmaceutical, concurred to pay $7.5 million to federal and state governments, not including interest.

  • New Internists Are Choosing Hospitals Over Outpatient Settings
  • Intermountain Healthcare, SCL Health Finalize Healthcare Merger
  • External Claim Audits Key to Strong Hospital Compliance Programs
  • Perhaps worthy of note is that a possible lack of compliance with the Medicaid Drug Rebate Program apparently contradicts both companies’ core mantras. The clearly outlined cultural values as explicitly listed on the AstraZeneca’s website, state the company “always” acts with integrity and makes the right choices while taking personal accountability for its actions and treating others with respect. Similarly outlined on Teva’s website are the company’s guiding values about integrity and doing what is right to garner respect.

    Nonetheless, the pair of settlements partly resolves a qui tam/whistleblower lawsuit where individuals may rightfully sue via the government for false claims and henceforth be involved in recovery involvement efforts.

    Efforts are ongoing to keep the medical reimbursement process clean and truthful. “We will continue to police the pharmaceutical industry when the Medicaid program overpays for drugs,” states First Assistant U.S. Attorney Louis D. Lappen of the Eastern District of Pennsylvania. “As these settlements demonstrate, it is critical for pharmaceutical manufacturers to comply with requirements of programs such as the Medicaid Drug Rebate Program to ensure that the government and the taxpayers are treated fairly in the reimbursement process,” Lappen confirms.

    $1M civil claims settlement for unlawful doc compensation

    This week, Vicki S. House, Executive Director of the Kentucky-based home health agency, Nurses’ Registry and Home Health Corporation, concurred to pay the government over $1 million to settle claims that she provided unlawful physician compensation. Defendants are scheduled for an upcoming August trial.

    According to the settlement, House provided unlawful compensation to 3 local physicians in return for patient referrals to the home health agency. Nurses’ Registry then submitted claims to Medicare to acquire payment in violation of the Stark Law which prohibits such behavior, according to the government.

    According to House's attorney, David Guarnieri, House accepted the government’s terms in fear of impending personal and financial stress. House’s now deceased husband, Lennie House, former CEO of Nurses’ Registry, allegedly passed away from “the ongoing financial toll” and “stress of litigation” from a similar 2011 settlement, claims Guarnieri. “No doctor has given Nurses (sic) Registry a referral because of a ticket to a basketball game," Guarnieri says.

    Regarding the 2011 violation, Nurses’ Registry reportedly bribed physicians to provide referrals in exchange for cash, concert tickets, and University of Kentucky basketball game seats. The company’s attorney, nonetheless, confirmed patient referrals merely stemmed not from kickbacks but as a result of the company’s quality healthcare being administered.

    Efforts are ongoing to prevent future events from occurring to maintain healthcare’s honesty. “We intend to use every tool available to protect the taxpayers from those who abuse federal health care programs for personal gain,” states Kerry B. Harvey, United States Attorney for the Eastern District of Kentucky. “Every dollar lost to fraud and abuse is a dollar that is unavailable to meet the needs of those who depend on Medicare for vital healthcare needs. We will continue to vigorously protect the interests of the United States in this litigation,” confirms Harvey.