Recently in False Claims Act Category

Tennessee Doctor Sentenced to 2 Years in Prison for Providing Unapproved Foreign Medication

June 12, 2013, by The McKellar Law Firm, PLLC

While most health care fraud cases deal with drug diversion, improper billing, and fraudulent insurance claims, there are other potential pitfalls for medical providers which are less common. One such pitfall is violating the Food, Drug, and Cosmetics Act (21 U.S.C. § 301, et al.).

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According to a press release from the U.S. Attorney's Office, Johnson City, Tennessee physician William Kincaid, was sentenced to 2 years in federal prison earlier this week for violating the Food, Drug, and Cosmetic Act. Kincaid was a doctor with East Tennessee Hematology-Oncology Associates, P.C., d/b/a McLeod Cancer and Blood Center.

Kincaid entered into a plea agreement, wherein he admitted that he had been obtaining unapproved drugs from a Canadian business, Quality Specialty Products, beginning in 2007. Such unapproved drugs are often referred to as "misbranded" drugs. These misbranded drugs included chemotherapy medications and were administered at Kincaid's medical clinic.

Greeneville Federal Court Judge J. Ronnie Greer sentenced Kindcaid, and the Judge declared that Kincaid's actions were "about greed" and the "motivation was to make more money." Judge Greer also pointed out that, although it was impossible to know which patients had received the unapproved drugs, the "emotional harm" to patients from not knowing whether they had received unapproved drugs contributed to the seriousness of the offense.

Kincaid's attorney informed the Court that his client had entered into an agreement with the United States and the State of Tennessee to pay $2.55 million in settlement of civil claims under the False Claims Act for false and fraudulent claims submitted to Medicare and TennCare.

Tennessee Hospital Pays $883k to Settle False Claims Act Violations

January 18, 2013, by The McKellar Law Firm, PLLC

The Nashville Business Journal reports that Tennessee-based Wayne Medical Center has entered into an agreement with the Federal Government to settle False Claims Act allegations, which were actually self-reported by Wayne Medical Center. Wayne Medical Center has agreed to pay $883,451 as part of the settlement. The improper claims relate to ambulance services of the hospital, and include providing medically unnecessary services, improperly documented services, and lack of the requisite signatures.

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As I have written about previously, the False Claims Act [FCA] (31 U.S.C § 3729 et seq.) penalizes those who defraud the government. For example, the FCA imposes civil penalties for making false claims for payments to the government, using false records to support a false claim, or receiving compensation from the government but delivering less than the proper amount to the intended recipient.

The penalties under the FCA are severe, and a civil penalty up to $11,000 may be assessed for each false claim. The government may also seek treble damages for each violation. The Justice Department has increasingly used the FCA to recover large sums of money. In Nashville, which is part of the Middle District of Tennessee, the the Middle Tennessee office for the U.S. Attorney secured more than $100 million in recoveries or settlements from health care fraud actions in 2011.

As an added punishment, violators of the FCA may be excluded altogether from federal health care programs such as Medicare and Medicaid. (42 U.S.C. § 1320a-7(b)).

Florida Sleep Clinics Charged with Violating the False Claims Act

June 16, 2011, by The McKellar Law Firm, PLLC

Earlier this week, a federal criminal Complaint was filed against a Florida sleep clinic and its owner. According to an article in Forbes online magazine, Bay Area Sleep Associates LLC, a Florida-based group, and its owner are facing charges related to violation of the False Claims Act ("FCA") for knowingly making false claims for reimbursement from Medicare and other federal programs. Medicare regulations require that diagnostic testing services, like those available from Bay Area Sleep Associates, be performed by licensed or certified technicians for reimbursement to be available.

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The Complaint specifically alleges that unlicensed sleep technicians were performing sleep tests on patients, that the defendants knew that this unlicensed work violated the reimbursement regulations, yet submitted claims for reimbursement anyway.

The FCA (31 U.S.C § 3729 et seq.) penalizes companies, contractors, and individuals who defraud the government. The FCA provides civil penalties for those who (among other things) make false claims for payments to the government, those who make or use false records relating to a false claim, or receive money or property from the government and deliver less than the full amount to its intended recipient.

The penalties under the FCA can be severe. A civil penalty up to $11,000 may be assessed for each false claim. Treble damages are available to the government as well. The Justice Department has used the FCA to recover an estimated $7.4 billion since January 2009 with approximately $5.8 million of that from cases involving health care fraud. Additionally, a judgment or settlement under the FCA can cause a business or individual to be excluded altogether from federal health care programs such as Medicare and Medicaid. (42 U.S.C. § 1320a-7(b)).

The FCA also provides a tremendous incentive to potential whistleblowers. It permits a whistleblower, referred to as a "Relator," to bring a civil action under the FCA on behalf of the United States. The Relator can receive between 15 and 30 percent of the amount recovered, plus attorney fees and expenses. This case involving Bay Area Sleep Associates case was allegedly initiated by a whistleblower.