False Claims Act Settlements Top $200 Million in the Past Week
Three recent settlements of False Claims Act (“FCA”) cases have resulted in recoveries for the United States and several individual states totaling $211 million. Whistleblowers initiated all the settled cases under the FCA’s qui tam provisions, which allow a private individual, who has inside knowledge of fraud resulting in a financial loss to the United States Government, to file a lawsuit on behalf of the United States in federal court. In addition to the federal FCA, many states have analogous laws, and the recent settlements include multi-million dollar payments to resolve state false claims cases. For their role in exposing the fraud and allowing the recovery of over $200 million in taxpayer dollars, the whistleblowers will receive a combined $18 million, with further awards to be decided in the near future. The recently settled cases all centered around allegations of fraudulently practices by the defendants to secure payments under government healthcare programs such as Medicare, Medicaid, and TRICARE.
On July 8, the Department of Justice (“DOJ”) announced a settlement with an Oklahoma City hospital of $72.3 million. The settlement resolves allegations that the Oklahoma Center for Orthopedic and Multi-Specialty Surgery, along with related entities and individuals (collectively “OCOM”), violated both the FCA and the Oklahoma Medicaid False Claims Act when they submitted claims for payment to Medicaid which had been tainted by OCOM’s noncompliance with both the Anti-Kickback Statute and the Stark Law. Both the Anti-Kickback Statute and the Stark Law were enacted to prevent improper financial incentives from compromising medical judgment. The settled lawsuits alleged that for a 12-year period, OCOM improperly garnered patient referrals from physicians by compensating the physicians through “free or below-fair market value office space,” “compensation in excess of fair market value,” “equity buyback provisions and payments . . . exceed[ing] fair market value,” and “preferential investment opportunities.” In this case, the whistleblower award has yet to be determined, but under the FCA, the whistleblowers are entitled to between 15-30% of the total amount recovered.
Next, a comprehensive settlement was reached with Universal Health Services, Inc., and related entities (collectively “UHS”) for $122 million, which resolved 18 separate FCA cases. Additionally, UHS also settled false claims liability with numerous individual states, including Massachusetts. UHS operates nearly 200 psychiatric facilities and was alleged to have submitted false claims to “the Medicare, Medicaid, TRICARE, Department of Veterans Affairs, and Federal Employee Health Benefit programs” due to the including of medically unreasonable or unnecessary inpatient behavioral health services and failing to provide adequate and appropriate services to its patients. The settled lawsuits included allegations that for nearly 12 years, UHS:
(1) admitted ineligible patients whose conditions did not require the level of care provided,
(2) failed to discharge patients after they no longer required inpatient care,
(3) billed for services not provided,
(4) failed to provide “adequate staffing, training, and/or supervision of staff,” and
(5) used improper physical and chemical restraints on patients.
Importantly, these settlements resolve the FCA case U.S. ex rel. Escobar v. Universal Health Services, Inc., which led to a landmark ruling wherein the Supreme Court affirmed the so-called “implied false certification” theory under the FCA. Kohn, Kohn & Colapinto, LLP, representing the National Whistleblower Center, filed an amicus brief in that case. The awards for the whistleblowers in the numerous cases settled by UHS will be divided from a pot of $15.86 million.
Finally, on July 13, Longwood Management Corporation (“Longwood”), which operates 27 skilled nursing facilities, agreed to pay $16.7 million to settle FCA claims. The whistleblowers who brought the case, Judy Boyce, Benjamin Monsod, and Keith Pennetti, will split a $3 million award. The DOJ has been cracking down on fraud and abuse at nursing facilities in the United States. This settlement continues a trend this year of holding facilities responsible for the overbilling of rehabilitation therapy services to Medicaid. Longwood was alleged to have engaged “in a systematic effort to increase Medicare billings” by providing medically unreasonable and unnecessary rehabilitation therapy to patients. Longwood therapists were allegedly pressured to increase the amount of therapy provided to Medicaid patients in order to hit revenue benchmarks.