Tuesday, February 21, 2017

Forest Laboratories and Pharmaceuticals to Pay $38 million to Resolve Kickback Allegations for Payments to Physicians for Speaking Programs

The government has become far more aggressive in classifying payments to physicians by drug companies as "kickbacks" unless certain criteria are met. 

In a recent case, Forest Laboratories LLC, located in New York, New York, and its subsidiary, Forest Pharmaceuticals Inc., agreed in December 2016 to pay $38 million to resolve allegations that they violated the False Claims Act by paying "kickbacks" through payments and meals for alleged sham speaking programs to induce physicians to prescribe the drugs Bystolic®, Savella®, and Namenda®.  

The civil settlement resolves a qui tam lawsuit filed by former Forest employee Kurt Kroening, in federal court in Milwaukee, Wisconsin that the federal government and some state governments joined. The allegations were that Forest violated the Anti-Kickback Statute, which prohibits the payment of remuneration to induce referrals of items or services covered by federal health care programs, by providing payments and meals to certain physicians in connection with speaker programs about Bystolic®, Savella®, or Namenda® between Jan. 1, 2008 and Dec. 31, 2011.  

The United States contends that the payments and meals were intended as improper inducements because Forest provided these benefits even when the programs were cancelled (and Forest provided no evidence of a bona fide reason for the cancellation), when no licensed health care professionals attended the programs, when the same attendees had attended multiple programs over a short period of time, or when the meals associated with the programs exceeded Forest’s internal cost limitations. 

Physicians who receive payments or meals from drug companies for speaking need to ensure that they do the speaking, that the programs are current and occurred. In the Forest case, the physicians received payments even when the speaking programs were cancelled. It would also be good practice to notify patients in writing when prescribing medications for which payment has been received that they have received payments from the drug manufacturer. 

Posted by Tracy Green, Esq.
Email: tgreen@greenassoc.com
Office: 213-233-2260

Friday, February 10, 2017

Six Florida Defendants Including Two Doctors Charged in Private Insurance Health Care Fraud Involving Sober Homes, Alcohol and Drug Addiction Treatment Centers and Drug Testing

Private insurance companies are aggressively pursing investigations into drug and alcohol rehabilitation centers, sober living homes, laboratories who process drug testing and physicians who make referrals. 

The referrals from licensed treatment centers to sober living facilities owned by the same or related parties is one red flag. In addition, a common issue is whether reduced rent to impoverished or unemployed clients is a referral payment. 

The cases that have more extreme facts are the ones that then get referred for criminal prosecution. A recent case has extreme facts alleged including billing for services not provided, falsification of records, not discharging clients using drugs, and excessive or unnecessary urine drug testing. 

On December 21, 2016, six Florida defendants, including owners, doctors, and an employee of sober homes and alcohol and drug addiction treatment centers were charged in a health care fraud scheme for filing fraudulent insurance claim forms and license applications and defrauding health care benefit programs.

Tuesday, February 7, 2017

Medical Device CEO by Sacramento Federal Judge Sentenced to One Year in Prison for Tax Evasion

On December 2, 2016, Briant Benson, a President and CEO of multiple medical device companies, was sentenced in Sacramento, California by U.S. District Judge Garland E. Burrell Jr. to 12 months and one day in prison for tax evasion. 

The year and one day sentences is more favorable that a one year sentence since it will qualify Mr. Benson for a 6 month sentence and halfway house. This sentence followed Mr. Benson's guilty plea in August.

According to court documents, during the years 2004 through 2006, Mr. Benson failed to file tax returns or pay any personal income tax to the Internal Revenue Service, despite receiving at least $2 million dollars in income as the President and CEO of multiple medical device companies. One of them Bentec Medical makes tubing and catheters, among other things, and the company was not involved in the allegations. 

Wednesday, January 25, 2017

Durable Medical Equipment Supply Owner and Operator Plead Guilty in Case Involving False Statements to Medicare About Inhalation Drugs Being Non-Compounded Drugs

Compounded medications and drugs have been under close scrutiny the past number of years. Claiming a drug is not compounded when it is compounded can be a "false claim" subjecting a business and its owners or managers subject to criminal prosecution and civil penalties. 

A recent case involving a durable medical equipment company and compounded inhalation drugs billed to Medicare shows what can happen where the drugs are not characterized properly on claims forms in order to avoid new billing rules.  

The rule being avoided was that as of July 1, 2007, Centers for Medicare/Medicaid Services revised nationwide policy regarding compounded inhalation solutions. After July 1, 2007, all compounded inhalation solutions were denied as not medically necessary for dates of service on or after July 1, 2007. 

Friday, January 20, 2017

Korean-American Owner of California Management Company for Physical Therapy and Occupational Therapy Clinics Sentenced to 121 Months

A recent health care fraud case shows what happens when business people get in a highly regulated business and do not follow the rules or have any compliance program. It also shows what happens when business people decide to enter a healthcare business and cater to an ethnic community which wants services others than those paid for by Medicare.

In this case, it involves the Korean American community in Los Angeles and Orange Counties which is hardworking and entreprenurial but where some do not necessarily understand the full consequences when regulations are not followed. Those consequences? Audits, fines, civil lawsuits and, in this case, criminal cases with lengthy prison sentences.

On January 10, 2017, a California man Simon Hong (also known as Seong Wook Hong) who ran management companies which allegedly operated rehabilitation clinics in Walnut, Torrance and Los Angeles was sentenced to 121 months in federal prison by United States District Judge David O. Carter. At the conclusion of the sentencing hearing, Judge Carter ordered Mr. Hong remanded into custody.

This is not just a straight forward fraud case. One of the issues is providers giving patients in an ethnic community services other than physical therapy but billing and documenting for physical therapy. In addition, it is a businessman operating clinics and then getting a percentge of income for referring the business. There were traditional health care fraud issues present but it shows what happens when business people decide to operate or manage a clinic.  

Mr. Hong owned or operated physical therapy clinics operated by companies called Hong’s Medical Management, Inc., CMH Practice Solution, and HK Practice and Solution, Inc. As part of his business, Mr. Hong recruited Medicare providers and beneficiaries and provided uncovered services like massage and acupuncture for the beneficiaries. Even though many of the beneficiaries did not receive actual physical therapy, those who worked with Mr. Hong billed Medicare for physical therapy, and then paid a large percentage (allegedly 56 percent) of the reimbursement funds back to Mr. Hong's management companies.

Wednesday, January 18, 2017

Neurosurgeon Sentenced for Health Care Fraud Involving Spinal Implant Devices. Admitted Hiding Financial Interest in Implant Company From California Hospitals

Spinal implant billing by hospitals has been an area of intense investigation and scrutiny for the past five years. Physicians who performed spinal surgeries at hospitals have been investigated to see whether they have ownership or other financial arrangement with companies selling implants to the hospitals. 

A recent case involving a neurosurgeon who used to practice in California where his plea agreement included admissions that he had an interest in an implant company that sold implants to California hospitals where he performed surgeries and that he his his financial interest from the hospitals. 

On January 8, 2017,  Detroit-area neurosurgeon Aria O. Sabit M.D., who previously practiced in Ventura, California, was sentenced to 235 months in prison after he pleaded guilty to four counts of health care fraud, one count of conspiracy to commit health care fraud and one count of unlawful distribution of a controlled substance. 

Before moving to moving to Michigan, Dr.  Sabit practiced in Ventura, California. Dr. Sabit admitted in his plea that in approximately February 2010, while he was on the staff of a California hospital, he became involved with Apex Medical Technologies LLC (Apex), which was owned by another neurosurgeon and three non-physicians. Dr. Sabit is also is a defendant in two civil False Claims Act cases brought by the Justice Department in the Central District of California and these cases are pending.  

In exchange for the opportunity to invest in Apex and share in its profits, Dr. Sabit admitted he agreed to convince his hospital to buy spinal implant devices from Apex and to use a substantial number Apex spinal implant devices in his surgical procedures. Dr. Sabit further admitted that he and Apex’s co-owners concealed Dr. Sabit’s involvement in Apex from the hospitals and surgical centers.

In connection with his guilty plea, Dr. Sabit admitted that the financial incentives provided to him by Apex and his co-conspirators caused him to use more spinal implant devices than were medically necessary to treat his patients in order to generate more sales revenue for Apex, which resulted in serious bodily injury to his patients. Dr. Sabit also admitted that, on a few occasions, the money he made from using Apex spinal implant devices motivated him either to refer patients for unnecessary spine surgeries or for more complex procedures that they did not need.


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