DOJ Touts 2016 as Bumper Year for False Claim Act Recoveries

The False Claims Act (FCA) remains the federal government's most potent fraud enforcement tool. After sagging a tad in recent years, FCA recoveries bounced back in fiscal year 2016. As usual, the health care industry was responsible for the lion's share of the money. Here are the key numbers from the year in FCA recoveries as reported by the U.S. Department of Justice (DOJ) on Dec. 14.

• $4.7 billion: Total FCA recoveries in FY 2016, the third highest in history;

• $2.5 billion: Total recoveries against health care providers in FY 2016 (not including state Medicaid);

• $31.3 billion: Total FCA recoveries between 2009-2016;

• $4 billion: Average annual FCA recoveries between 2009-2016;

• $19.3 billion: Total FCA recoveries from health care providers between 2009-2016;

• $2.4 billion: Average annual FCA recoveries from health care providers between 2009-2016;

• 702: Total qui tam (whistleblower) lawsuits filed in FY 2016, an average of 13.5 cases per week;

• $2.9 billion: Total recoveries in qui tam lawsuits in FY 2016;

• $519 million: Total recoveries paid to whistleblowers in FY 2016.

Top 5 FCA Health Care Recoveries
The biggest FCA recovery against a lab for the year was the $260 million paid by Millennium Health (formerly Millennium Laboratories) to settle charges of billing unnecessary urine and genetic tests and giving free items to physicians to induce referrals of costly tests. The complete Top 5:

1. Wyeth and Pfizer: $1.2 billion for allegedly reporting false and fraudulent prices on drugs used to treat acid reflux;

2. Novartis Pharmaceuticals Corp.: $390 million for allegedly paying kickbacks to specialty pharmacies in exchange for recommending the drugs Exjade and Myfortic;

3. Tenet Healthcare Corp.: $244.2 million for allegedly paying kickbacks to physicians in return for referral to four Tenet hospitals;

4. Millennium Health: $260 million for alleged false billing of urine and genetic tests and paying kickbacks to physicians;

5. RehabCare Group Inc., RehabCare Group East Inc. and parent company Kindred Healthcare Inc.: $125 million for allegedly inducing skilled nursing homes to falsely bill Medicare for rehab services that were not medically necessary or provided at all.

Beyond the Numbers
The DOJ FY 2016 FCA report is noteworthy not just for the numbers but the enforcement trends it cites, including:

Voluntary Compliance: U.S. Health and Human Services Inspector General Daniel R. Levinson emphasized that the big dollar values belie the "collateral benefits" achieved via "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."

Executive & Individual Accountability: The DOJ also continued its determination to go after not just entities but the individuals running them in pursuit of the policy announced in the September 2015 Yates memorandum. Of the 11 individuals the DOJ cites as being held personally liable for alleged false claims in 2016, nearly half were connected with laboratory testing, including:

• Dr. Jonathan Oppenheimer, a former executive with a Nashville drug testing laboratory who agreed to a $9.35 million settlement;

• Gottfried and Mieke Kellerman, founders of Pharmasan Labs, Inc. and NeuroScience, Inc., who settled for $8.5 million;

• Dr. David G. Bostwick founder and former owner and CEO of Bostwick Laboratories, who entered into a $3.75 million settlement; and

• Dr. David Spellberg and Robert A. Scappa, urologists who settled allegations of billing Medicare for medically unnecessary fluorescence in situ hybridization, (FISH) testing.

False Claims Act Recoveries in Qui Tam Cases against Health Care Providers Since 2009 (In billions of dollars)

Takeaway: The DOJ's reporting of FY 2016 fraud recoveries indicates large scale and individual enforcement efforts continue unabated and that laboratory testing is a fruitful target for enforcement agencies.