The Department of Justice (DOJ) obtained more than $4.7 billion in settlements and judgments from civil cases involving fraud and false claims in fiscal year 2016.
Of that $4.7 billion recovered, $2.5 billion came from the healthcare industry, including drug companies, medical device companies, hospitals, nursing homes, laboratories, and physicians. The biggest recoveries came from drug companies.
The big news is that only one medical device company and no orthopedic surgeons even made it into the list of settlements announced by the DOJ in December.
Olympus Corp. of the Americas, the nation’s largest distributor of endoscopes, and a subsidiary, paid $646 million in a 2016 global settlement, including $267.3 million in federal recoveries under the False Claims Act, $43.5 million in recoveries for state Medicaid programs, and $335.2 million in criminal penalties.
The settlement resolved allegations that Olympus paid kickbacks to doctors and hospitals in exchange for their purchase of Olympus endoscopes and other medical and surgical devices.
The settlement resolved a qui tam lawsuit in which the whistleblower received $44.1 million as his share of the federal claims.
Physicians
The largest settlement with a physician was with cardiologist Asad Qamar, M.D., and his practice, the Institute of Cardiovascular Excellence (ICE). He paid $2 million, and released claims to an additional $5.3 million in suspended Medicare funds, to settle allegations that he and his practice billed Medicare, Medicaid, and TRICARE for medically unnecessary procedures and paid kickbacks to patients by waiving Medicare copayments irrespective of financial hardship.
Medicare copayments are designed to provide beneficiaries with an incentive to avoid unnecessary procedures. The government alleged that by waiving the required copayments indiscriminately, Qamar and ICE induced patients to undergo unnecessary and invasive procedures. This conduct, said the government, made Qamar the highest paid Medicare cardiologist in the U.S. in 2012 and 2013.
Drug Makers
The largest recoveries—$1.2 billion—came from drug and medical device industry.
Drug manufacturers Wyeth and Pfizer Inc. paid $784.6 million to resolve federal and state claims that Wyeth knowingly reported false and fraudulent prices on two drugs used to treat acid reflux, Protonix Oral and Protonix IV. The government alleged that Wyeth (before it was acquired by Pfizer) failed to report deep discounts available to hospitals, as required by the government to ensure that the Medicaid program enjoyed the same pricing benefits available to the company’s commercial customers. Wyeth paid $413.2 million to the federal government and $371.4 million to state Medicaid programs.
Hospitals and Outpatient Clinics
Hospitals and outpatient clinics accounted for $360 million in recoveries. Tenet Healthcare Corp., a major hospital chain, paid $244.2 million to resolve civil allegations that four of its hospitals engaged in a scheme to defraud the U.S. by paying kickbacks in return for patient referrals. Tenet paid an additional $123.7 million to state Medicaid programs, and two of its subsidiaries pleaded guilty to related charges and forfeited $145 million, bringing the total resolution to $513 million.
Medical Labs
In the medical lab arena, Millennium Health (formerly Millennium Laboratories) paid $260 million to settle allegations that it billed Medicare, Medicaid, and other federal health care programs for excessive and unnecessary urine drug and genetic testing and also that it gave free items to induce physicians to refer expensive and profitable lab tests to Millennium, in violation of the Anti-Kickback Statute and Stark Law.
Most false claims actions are filed under those whistleblower, or qui tam, provisions. If the government wins, the whistleblower receives up to 30% of the recovery. Whistleblowers filed 702 qui tam suits in 2016 and were awarded $519 million.
Since 2009, the government has recovered $19.3 billion in healthcare fraud cases.
