Weekly Enforcement Report: Plenty of Kickbacks

Last week’s cases saw a major false claims-related settlement, as well as many kickback-related schemes.

While last week’s healthcare-related enforcement actions didn’t see any lab-specific cases, they were heavy on the kickback side of things. The week also saw a major false claims-related settlement involving three California healthcare providers.

In that action, announced Dec. 7 by the California Attorney General’s Office, not-for-profit health system Dignity Health and two healthcare facility subsidiaries operated by Tenet Healthcare Corporation—Sierra Vista Regional Medical Center and Twin Cities Community Hospital—settled false claims allegations for $22.5 million.

According to the California Attorney General’s Office, the three entities were accused of playing a role in an “organized scheme” that involved causing false claims for “Enhanced Services” for Adult Expansion Medi-Cal members to be billed to Medi-Cal. However, the US and the State of California allege that these claims:

Didn’t “reflect the fair market value of any Enhanced Services provided” and/or duplicated services the providers were already required to offer
“Were unlawful gifts of public funds in violation of the California Constitution”
Weren’t “allowed medical expenses” under the County Organized Health System’s contract with the California Department of Health Services

Dignity will be on the hook for $13.5 million to the US and $1.5 million to the State of California, while Sierra Vista and Twin Cities must pay $6.75 million to the US and $750,000 to the State of California. The settlements also resolve claims brought by the former medical director of CenCal in a qui tam whistleblower lawsuit.¹

Other Healthcare-Related Enforcement Actions from Last Week

Apart from that false claims settlement, most of last week’s actions involved kickbacks.

Dec. 7: A Florida woman was sentenced to three years in prison for participating in a healthcare fraud scheme and “for making a false statement in a matter involving a federal healthcare benefit program,” according to the U.S. Department of Justice. The telemarketing scheme created doctor’s orders for medically unnecessary durable medical equipment (DME) that was then billed to Medicare.²

Dec. 7: A Florida-based pain doctor, Dr. Steven Chun, 59, received a three-and-a-half-year sentence for his role in a scheme in which he received more than $278,900 in bribes and kickbacks from Insys Therapeutics, Inc. in exchange for prescribing Subsys, a fentanyl spray manufactured and sold by Insys. The kickbacks were disguised as speaker fees. Chun’s prescriptions resulted in Medicare Part D paying more than $4.5 million. As part of his sentence, Chun must also forfeit the $278,900 he gained as part of the scheme.³

Dec. 8: A former NY Elm Pharmacy Inc. employee and employee-owner of 888 Pharmacy Inc., both New-York based pharmacies, were arrested for their roles in schemes involving these pharmacies that cost Medicaid and Medicare $10.5 million. The two paid kickbacks and bribes “to be able to fill medically unnecessary prescriptions at pharmacies in Brooklyn and Queens,” according to the DOJ. Each defendant could see up to 10 years in prison if they are convicted.⁴

Dec. 8: The co-owner and operator of Ohio medical marketing companies was charged for healthcare fraud and paying kickbacks that cost federal healthcare benefit programs $64 million. James D. Feeley, 45, along with his business partner, allegedly paid telemedicine companies, who in turn paid kickbacks to doctors for prescriptions, which Feeley and his partner sent to their pharmacy clients. Those pharmacies then paid Feeley and his businesses a cut of the money they received from billing healthcare programs for the prescriptions. Feeley faces up to 10 years in prison for healthcare fraud conspiracy and up to five years in prison for kickback conspiracy.⁵

Dec. 12: A former psychologist from Illinois, Theresa Kelly, 56, was charged for allegedly attempting to seek “reasonable accommodations” and “approved medical leave” from her ex-employer, Veterans Affairs (VA) “without valid documentation,” according to the DOJ. The six-count indictment also charged her with participating in a scheme in which she billed Medicare for services she never provided at an Illinois-based nursing home and with “submitting false medical documents” relating to “a 2020 lawsuit against the VA,” the DOJ says.⁶

Weekly Enforcement Report: Plenty of Kickbacks

Other Healthcare-Related Enforcement Actions from Last Week

References:

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