Saturday, December 26, 2015

21st Century Oncology to Pay $19.75 Million to Settle Civil False Claims Lawsuit for Alleged Unnecessary Laboratory FISH Tests Ordered by Four of Its Urologists. No Admission of Liability But Corporate Integrity Agreement Required

On December 18, 2015, 21st Century Oncology LLC, a publicly traded entity which operates in 17 states, agreed to pay $19.75 million to the government to resolve allegations that it violated the False Claims Act by submitted claims to Medicare and Tricare forfluorescence in situ hybridization, or “FISH,” tests that were allegedly not medically necessary. As with most settlements, there was no admission of liability.

21st Century is a nationwide provider of integrated cancer care services that is headquartered in Fort Myers, Florida. False claim lawsuits often get settled once the government intervenes due to the high litigation costs and potential exposure in litigating with the government, especially oncology which relies heavily on Medicare billing. 21st Century had to pay an extra $528,000 to the qui tam relator's attorneys' fees and costs.

FISH tests are laboratory tests performed on urine that can detect genetic abnormalities associated with bladder cancer.  The government alleged that 21st Century submitted claims for unnecessary FISH tests that were ordered by four of its urologists, Dr. Meir Daller, Dr. Steven Paletsky, Dr. David Spellberg and Dr. Robert Scappa, all of whom practiced in the Fort Myers area.  

The government also alleged that 21st Century encouraged these physicians to order unnecessary FISH tests by offering bonuses that were based in part on the number of tests referred to 21st Century’s laboratory.  This type of marketing and bonus arrangement is used to show how the economics affect medical necessity decisions.

The claims here were brought to the government's attention by a former employee. The allegations were originally brought in a lawsuit filed by a whistleblower, a former 21st Century Oncology LLC medical assistant. The government intervened and this settlement resolves the lawsuits. The former 21st Century employee whistleblower will receive $3.2 million as her share of the recovery in this case.

Compliance and Corporate Integrity Agreement One of the reasons our office pushes health care businesses to have a fraud compliance plan is so that any allegations by employees are raised at the first opportunity or at the exit conference in order to avoid expensive qui tam lawsuits. Larger companies and those that are publicly traded and can afford large repayments such as the one here ($20 million) get the opportunity for Corporate Integrity Agreements while smaller companies are more hard pressed to obtain them.

As part of the settlement, the U.S. required 21st Century Oncology to enter into a Corporate Intergrity Agreement. Under this Agreement, 21st Century will be required to do the following (much of which is in a regular compliance plan) for 5 years:
(1) appoint a chief compliance officer; 
(2) maintain its existing compliance program and compliance committee;
(3) provide management certifications;
(4) screen employees to ensure they are not excluded;
(5) provide certain compliance training and education; 
(6) engage an independent review organization; and
(7) other enumerated requirements.

Failure to comply with the plan can result in 21st Century from being excluded from Medicare. Generally, companies are very careful to be compliant in these cases.

Posted by Tracy Green, Esq.
Office: 213-233-2261


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