DOJ Surveys False Claims Victories for 2016

As we closed out the calendar year, the U.S. Department of Justice (DOJ) reflected on its successes for the fiscal year 2016 (FY 2016) which ended Sept. 30, 2016. Principal Deputy Assistant Attorney General Benjamin C. Mizer announced in mid-December that the DOJ achieved over $4.7 billion in False Claims Act (FCA) recoveries. Highlights for FY 2016:

• $4.7 billion total recovered in settlements and judgments from civil fraud or false claims cases, which includes $2.5 billion from health care cases (not including state Medicaid losses)

• This $4.7 billion recovery is third highest annual recover in FCA history

• Fiscal year average is now $4 billion for period 2009-2016

• $31.3 billion was recovered between 2009-2016

• 2016 is the seventh consecutive year recoveries are greater than $2 billion

• 702 qui tam (whistleblower) lawsuits were filed in FY 2016—that’s an average of 13.5 new cases each week says the DOJ

• $2.9 billion recovered via qui tam/whistleblower suits in FY 2016

• Whistleblowers received $519 million in FY 2016

• Aggregate qui tam recoveries for January 2009 through end of FY 2016 were $24 billion in settlements and judgments and more than $4 billion in whistleblower awards

• January 2009-FY 2016 total health care fraud recoveries are $19.3 billion—more than half of all recoveries achieved in the past 30 years

“These recoveries restore valuable assets to federally funded programs such as Medicare, Medicaid and TRICARE, the health care program for service members and their families. But just as important, the Department’s vigorous pursuit of health care fraud prevents billions more in losses by deterring others who might otherwise try to cheat the system for their own gain,” the DOJ said in the release announcing the FY 2016 achievements. The DOJ highlighted healthcare entities caught up in these recoveries, including drug and device companies, hospitals, nursing homes, physicians and laboratories. Among the health care cases spotlighted is the Millennium Health (formerly Millennium Laboratories) settlement for $260 million resolving allegations of unnecessary urine drug and genetic testing and providing free items to physicians referring expensive lab tests. It’s not just all about numbers though. In addition to these high profile settlements, U.S. Health and Human Services Inspector General Daniel R. Levinson emphasized a commitment to aggressive enforcement at all levels and the collateral benefits in addition to the tally of dollars recovered: “Beyond those significant settlements, though, my agency works to improve voluntary observance of federal laws through corporate integrity agreements addressing compliance weaknesses and self-disclosures that encourage health care providers and other entities to voluntarily report suspected violations.” The DOJ also continued to emphasize the need to hold accountable not just entities, but the individuals running them—citing what is commonly referred to as the Yates memorandum, issued in September 2015.

Among the individuals spotlighted by the DOJ as being held personally liable for alleged false claims, nearly half were individuals with connections to laboratory testing, including:

• Jonathan Oppenheimer, a former owner and executive of a Nashville drug testing laboratory, who agreed to a $9.35 million settlement. The physician and the lab agreed to be jointly and severally liable for the settlement amount and the physician was excluded from participating in federal health care programs for five years. The government alleged that the lab and physician violated restrictions in the Anti-Kickback EHR safe harbor and Stark EHR exception.

• Gottfried and Mieke Kellerman, founders of Pharmasan Labs, Inc. and NeuroScience, Inc., along with the companies, agreed to pay $8.5 million to settle allegations the lab submitted claims for ineligible food sensitivity tests to Medicare.

• David G. Bostwick founder and former owner and CEO of Bostwick Laboratories agreed to pay up to $3.75 million to settle allegations his laboratory violated the False Claims Act by billing for medically unnecessary cancer detection tests and provided incentives for physician referrals.

• Urologists Dr. David Spellberg and Robert A. Scappa, D.O. settled allegations of medically unnecessary fluorescence in situ hybridization, or “FISH,” testing—Spellberg settled for more than $1 million.