Health Care Fraud Blog

Early in the last decade the federal government began paying substantial attention to the marketing of drugs by manufacturers. Investigations and eventual settlements with Tap Pharmaceuticals ($875 million) and AstraZeneca ($350 million) paved the way for compliance guidance by CMS Office of Inspector General (OIG) published in 2003.

The guidance addressed potentially illegal marketing practices and the connection between marketing practices, kickbacks and false claims. The fraud related to the reporting of pricing by manufacturers to the government as well as the enabling of providers to charge for drugs given to them for free. The kickback issues related to all manner of gifts, grants, research monies paid to physicians to induce them to prescribe particular drugs as well as rebates, unreported discounts on drug products administered by physicians. The investigations and guidance led to a number of changes in the marketing practices of manufacturers to attempt to avoid kickback prosecutions. At the core, bribing doctors, in various ways to write prescriptions for your drugs became dangerous.

Apparently, the message did not get through all the way. Recently there have been a number of settlements and even guilty pleas by pharmaceutical manufacturers, including AstraZeneca ($550 million), Pfizer ($2.3 billion) and Eli Lilly ($1.4 billion) related to other unlawful marketing practices. However, these cases involved the promotion of so called “off label” uses for their drugs, with some allegations kickbacks as well. The Pfizer settlement stems from an investigation instigated by six whistleblowers, who received $102 million from the settlements. The complaint charged that Pfizer sent doctors on all-expense-paid trips to resorts, gave out free massages, and paid kickbacks to doctors, to provide incentives to the doctors for them to prescribe drugs for off-label uses.

There is a question of how effective current marketing efforts are without resorting to outright bribing of physicians to prescribe drugs. In an interesting article, available here, suggests that the current marketing by manufacturers worldwide is not particularly effective, even with increased marketing budgets. Also, the drug industry as a whole is headed for financial trouble with price controls which are likely inevitable. Therefore, it leads to the question of whether some of the discarded and potentially unlawful methods will be finding their way back into use with fines and settlements merely being the cost of doing business.

“Pharmaceuticals Out Of Balance - Reaching the tipping point” is available for download, click here.

According to a report released this earlier this morning, hours ahead of an official announcement scheduled for later today, arrests were made in Miami, Brooklyn and Detroit. Federal agents are expected to take about 30 suspects into custody from three states on charges related to Medicare fraud totaling $61 million.

The arrests follow an investigation by the Medicare Fraud Strike Force, a partnership between the two federal agencies that started nationally in May. Click here to read an earlier blog post.

According to sources speaking on the condition of anonymity, HHS Secretary Kathleen Sebelius will hold a news conference this afternoon in New York to make the announcement of the government’s continued crackdown on Medicare fraud. A key part of President Barack Obama's proposed healthcare overhaul targets eradicating an estimated $60 billion a year lost to Medicare fraud.

Today’s raids come a week after HHS reported that in 2008 Miami-Dade County received more than $500M from Medicare in home healthcare payments intended for the sickest patients. This figure is more than the rest of the country combined. To read the OIG report, click here.

Indictments are expected to charge that Florida scammers arranged for fake patients to bill for home healthcare, including homeless patients and others fraudulently listed as blind diabetics who submitted bills for visits by nurses twice-daily to give them insulin injections. See this Miami Herald video.

In Detroit, suspects paid recruiters to find patients willing to fake symptoms in order to justify expensive testing, and in turn bill Medicare for reimbursement. Two Brooklyn suspects are alleged to have billed Medicare for medically unnecessary durable medical equipment (DME), including expensive shoe inserts reserved for diabetics.

Increasingly the manner in which the government promotes its law enforcement efforts in the Medicare arena sound more and more like military operations or even Saturday morning cartoons. The creation of the “Strike Force” known as HEAT, Health Care Fraud Prevention & Enforcement Action Team, sounds a lot more like commandos than lawyers and agents arresting doctors and white collar criminals. In the press releases you see the use of the words “combat” and “battle” and now the battle also has phases: Miami (Phase One), Los Angeles (Phase Two), Detroit (Phase Three), and Houston (Phase Four).

For more, click here.

In one of the recent pleas related to the government’s new focus on Medicare fraud in Detroit, a physical therapist and two others pleaded guilty to approximately $2.5 million in Medicare Fraud related to physical and occupational therapy services. Click here to read the plea agreement.

Baskaran Thangarasan, one of the conspirators, was paid $50 per file to falsify multiple physical therapy visits for patients who received no therapy. Mr. Thangarasan admitted to producing over 1000 such files during the course of the conspiracy. He now faces a maximum of 10 years in prison for his role although the actual sentence will be somewhat less.

To read the article click here.

A Jacksonville physician, Janet Johnson-Hunter, pleaded guilty to altering medical records to justify ambulance transportation of patients. Rather than have the case presented to a grand jury and require the government obtain an indictment, Dr. Hunter-Johnson waived that right and instead pleaded guilty to an information, available here. Physicians do not receive reimbursement for ambulance transportation, however ambulance companies do and Dr. Hunter allegedly owned a private ambulance company.

According to the plea related documents, the doctor had staff modify patient records to reflect that patients could not walk or use a wheelchair, a precondition for payment for ambulance transportation. The Stark law prohibits a physician from referring patients to pharmacies, diagnostic companies and other ancillary service providers in which the physician has an ownership interest. The law was put into effect to prevent physicians from over-ordering services due to that financial interest.

For more info, click here.

In an interesting suit filed against Amgen, the maker of Epogen, as well as two large dialysis clinic chains, Fresenius and Davita, a whistleblower alleges that salespeople for the drug company told clinic operators and physicians working there to prescribe specific dosage levels of the drug Epogen for patients based upon the maximum reimbursement under Medicare for the drug rather than actual patient needs.

Epogen, used to treat anemia, comes in 1 ml vials with various unit doses between 1000 and 10,000 units of the drug. The cost, and reimbursement for the vials, administered to the patients at the clinics, can vary dramatically based upon the unit dosage used. The whistleblower is a former sales manager for Amgen and is also a nurse practitioner. The Federal False Claims Act requires the person bringing the suit on behalf of the federal government, referred to as a Relator, to have first hand knowledge of the fraud alleged. The Relator can receive up to 25% of the amount recovered under the suit.

For more, click here.