Top 20 Healthcare Fraud Cases of 2017

It has been a busy year so far on the healthcare fraud and settlements front.

Our friends at HealthFinance compiled a lengthy list of healthcare frauds and settlements to date for 2017.

We’ve culled the list and report on the top 20 fraud allegations and settlements ranked according to the amount of money involved.

20. $6.5 Million Carolinas Healthcare System Upcoding Settlement

Carolinas Healthcare System agreed to pay $6.5 million to settle whistleblower lawsuit that alleged the system was upcoding testing codes to get bigger payments from federal healthcare programs.

From 2011 to 2015, Carolinas conducted urine tests that should have been categorized “moderate complexity” tests when being coded for government reimbursement. However, the tests were coded as “high complexity” tests instead, triggering a higher payment.

The whistleblower lawsuit was filed by a former Carolinas lab director Mark McGuire. He will receive $1.365 million.

19. $11 Million Chiropractor False Billing Guilty Plea

An Illinois chiropractor, his father and brother have pleaded guilty of robbing insurers of more than $10 million and will serve time in federal prison.

The trio operated Gordin Medical Center in Wheeling where they falsely billed carriers for medical services that were either not needed or never rendered. Authorities said the trio also tried to cover up the scheme by fabricating patients’ medical records.

18. $20 Million Sanofi-Aventis Drug Pricing Settlement

Sanofi-Aventis will pay nearly $20 million to settle claims that it miscalculated drug prices and overcharged the Department of Veterans Affairs (VA).

The company informed the VA that it had incorrectly calculated the maximum for certain drugs from 2007 to 2011, and overcharged the agency. The Office of Inspector General for the VA investigated and concluded that overcharges had occurred going back to 2002.

17. $32 Million Florida Risk Score Overbilling

Two Florida Medicare Advantage insurers, Freedom Health and Optimum HealthCare, have agreed to pay nearly $32 million to settle a whistleblower lawsuit that alleged Medicare overpaid the health plans after they made their patients appear sicker than they were, or claimed they had treated patients for medical conditions they either did not have or for which they had not been treated.

The suit also alleged that the health plans directed their doctors to call patients in for unnecessary office visits in to find ways to raise their risk scores.

16. $34 Million Improper Physician Relationships Settlement

Two Southwest Missouri providers, Mercy Hospital Springfield and its affiliate, Mercy Clinic Springfield Communities, will pay the government $34 million to settle allegations they violated the False Claims Act through improper financial relationships with referring physicians.

The settlement resolves allegations that the defendants submitted fraudulent claims for chemotherapy services for patients referred by oncologists whose compensation “improperly took into account the value of their referrals of patients to the infusion center.”

Viran Roger Holden, M.D., employed by one of the defendants, brought a whistleblower suit and will receive $5.4 million.

15. $40 Million Fraudulent Home Health Conviction

Noble Ezukanma, M.D., of Fort Worth, Texas, was convicted of conspiracy and multiple counts of health care fraud.

Ezukanma and two other defendants owned and operated US Physician Home Visits in Dallas. They also formed two other healthcare companies. The three companies appeared to have been set up as separate companies, but worked as one.

Ezukanma certified 94% of the Medicare beneficiaries receiving home health services from one of the companies, and 65% of the Medicare beneficiaries receiving services from the other.

“Had Medicare known of the true ownership and improper relationship between the three companies, Medicare would not have allowed these companies to enroll in the program and bill for services,” the Department of Justice (DOJ) said.

The false certifications spawned more than $40 million in false Medicare claims.

14. $42 Million Improper Financial Relationship Settlement

Los Angeles hospital Pacific Alliance Medical Center will pay $42 million to settle allegations it had “improper financial relationships” with referring physicians.

A whistleblower alleged that the Center submitted false claims to Medicare and MediCal for services to patients who had been referred by physicians with whom the defendants had improper financial relationships. Those relationships included the defendants allegedly paying above-market rates to rent office space in physicians’ offices, and marketing arrangements that allegedly provided “undue benefit” to physicians’ practices.

The lawsuit was filed by Paul Chan, who worked as manager for one of the defendants. He is entitled to receive more than $9.2 million for his share of the recovery.

14. $42 Million Mount Sinai Recovery Demand

New York-based Mount Sinai Hospital owes the government nearly $42 million for improperly billed Medicare claims in 2012 and 2013, according to the Office of Inspector General (OIG). The agency wants that money back.

Mount Sinai says that it’s too late because the agency missed the deadline for recovery.

12. $51 Million Humble Surgical Out-of-Network Court Order

Humble Surgical Hospital in Texas has been ordered to pay Aetna $51.4 million by collecting windfall profits from having patients use out-of-network services.

Humble allegedly paid kickbacks of 30% of facility fees to 103 physicians in exchange for their referrals to out-of-network services. Humble allegedly charged patients in-network rates but billed the insurer at out-of-network rates.

The hospital waived the patient’s share of the bill and promised patients their out-of-pocket expenses would be equal to or less than in-network.

11. $54 Million Skilled Nursing and Rehab Settlement

Pennsylvania-based skilled nursing and rehabilitation therapy provider Genesis Healthcare will pay $53.6 million to settle six federal lawsuits and four sets of allegations that it violated the False Claims Act by submitting claims to government payers for unnecessary or “grossly substandard” services.

The provider submitted false claims by billing for hospice services for patients who weren’t actually terminally ill, as well as billing inappropriately for certain physician evaluation management services.

10. $60 Million TeamHealth Upcoding

TeamHealth Holdings, a nationwide hospital staffing provider, has agreed to pay $60 million to settle allegations that it billed Medicare, Medicaid, the Defense Health Agency and the Federal Employees Health Benefits Program for more expensive medical services that were actually provided.

TeamHealth has more than 20,000 affiliated physicians and advanced practice clinicians and offers outsourced emergency medicine, hospital medicine, critical care, anesthesiology, orthopedic hospitalist, acute care surgery, obstetrics and gynecology hospitalist, and other services to approximately 3,300 acute and post-acute facilities and physician groups across the country.

Bijan Oughatiyan, M.D., a physician employed by the provider, filed a whistleblower lawsuit. He will receive about $11.4 million.

  9. $70 Million False Billing Recruiting Scheme

Victor Lipkin, the owner of a Brooklyn clinic, pleaded guilty to conspiracy to commit wire fraud, mail fraud and healthcare fraud and was sentenced to five years in prison. He will pay over $8 million in restitution.

Lipkin and others recruited “financially disadvantaged and homeless people” covered by Medicare or Medicaid to act as patients and undergo medically unnecessary tests in exchange for cash kickbacks.

They recruited individuals from soup kitchens and local welfare offices and coached them on what to say on various medical forms in order to make it falsely appear that the medical tests were medically necessary. They fraudulently billed over $70 million to Medicaid and Medicare and were paid over $25 million in reimbursements.

  8. $115 Million Anthem Data Breach Settlement

In the biggest data breach in history, Anthem saw the personal information of nearly 79 million people stolen.

The $115 million settlement is the result of the massive class action lawsuit filed after a 2015 cyberattack on Anthem.

Lawyer fees will eat up a third of the $115 million fund.

  7. $147 Million California Pill Mill Charges

Fourteen defendants, including four physicians, were charged in Central California for allegedly participation in fraud schemes that resulted in $147 million in losses.

The alleged frauds involved kickback schemes connected to compounded drugs, home health services, physical therapy, acupuncture, Medicare Part D prescription drugs, diagnostic sleep studies and hospice care.

The physicians were charged with illegally prescribing controlled substances, including the opiate oxycodone, and making a false statement on a Drug Enforcement Administration (DEA) registration application.

One physician allegedly sold more than 1.2 million pills, most of which were maximum strength, as well as hundreds of thousands of other pills like sedatives Xanax and Soma.

  6. $150 Million McKesson Civil Penalty

McKesson will pay a record $150 million civil penalty for alleged violations of the Controlled Substances Act (CSA).

The company will suspend sales of controlled substances from distribution centers in Colorado, Ohio, Michigan and Florida for multiple years. The settlement will require McKesson to hire an independent monitor to assess compliance—the first independent monitor of its kind in a CSA civil penalty settlement.

From 2008 until 2013, McKesson supplied various U.S. pharmacies an increasing amount of oxycodone and hydrocodone pills. For instance, McKesson processed in excess of 1.6 million orders for controlled substances between June 2008 and May 2013. However, only 16 orders were flagged as suspicious, and all were connected to one incident involving a customer who’d recently been “terminated.”

  5. $158 Million Pharmacy Indictment

Eight individuals in Texas were indicted in a scheme involving at least three pharmacies and $158 million in fraudulent claims for pricey compound drugs.

The individuals filed forms to receive electronic payments from the Department of Labor-Office of Workers’ Compensation (OWCP) for creams used to treat scars, wounds, and pain. Reimbursement rates for these drugs can reach up to $28,000 per container.

One pharmacy allegedly paid kickbacks to doctors for referring OWCP patient prescriptions to the pharmacies, disguising the kickbacks as loans and prescription pads were given to physicians referring prescriptions.

Prescriptions for compound medications were written for all patients regardless of whether they were needed or wanted, according to the DOJ.

Roughly $158 million in false claims were submitted through the OWCP, and about $82 million was paid out.

The government seized more than $50 million in assets connected to the fraud scheme as well as a multi-million-dollar home on Lake Travis in Austin, Texas.

  4. $215 Million Risk Corridor Ruling

In a first, a Federal Claims judge has ruled against the government and granted Moda Health Plan $215 million in risk corridor payments. The government was supposed to pay insurers for losses suffered during the first three years of Obamacare.

Moda sued in 2016 demanding payments. However, Congress intervened and said it did not approve the funds for risk corridors and insurers only received partial payments.

The judge’s ruling of a partial summary judgment for Moda goes against another court ruling that found in favor of the government. In November 2016, a court ruled against Land of Lincoln Mutual Health Insurance Company’s claim to get risk corridors payments.

There are at least 17 cases brought by insurers pending in the Court of Federal Claims, according to the Health Affairs blog. Another is pending on appeal in the United States Court of Appeals for the Federal Circuit.

The government is expected to appeal the ruling.

  3. $730 Million Meaningful Use Overpayments

The OIG says Centers for Medicare and Medicaid Services (CMS) overpaid more than $729 million in incentive payments to eligible providers that didn’t meet meaningful use requirements. The OIG said a sample of eligible providers didn’t maintain support for attestations.

CMS also failed to conduct minimal documentation reviews, which officials said left the incentive program open to abuse and misuse of federal funds.

The agency also made $2.3 million in Electronic Health Records (EHR) incentive payments that didn’t adhere to program-year payment requirements when providers switched from Medicaid to Medicare incentive programs. Officials said this is because CMS did not ensure those providers who switched programs were in the correct payment year.

Officials said that CMS should attempt to recover the more than $700 million in inappropriate incentive payments and $2.3 million in overpayments to the providers who switched programs.

  2. $1 Billion UnitedHealth Medicare Advantage Accusation

In May, the government accused UnitedHealth Group of overcharging the federal government by more than $1 billion through its Medicare Advantage plans.

The government accuses the insurer of making patients appear sicker than they were to collect higher Medicare payments. The government said it had conservatively estimated that the company “knowingly and improperly avoided repaying Medicare” for more than a billion dollars over the course of the decade-long scheme.

Benjamin Poehling, a former finance director for the UnitedHealth division that oversees Medicare Advantage Plans filed a whistleblower suit in 2011.

It’s the second time the government has intervened to support a whistleblower suing UnitedHealth under the False Claims Act.

The company says the government, “fundamentally misunderstands or is deliberately ignoring how the Medicare Advantage program works. We reject these claims and will contest them vigorously.”

  1. $1.3 Billion False Billing Bust

This July, the government arrested 412 defendants across 41 federal districts, including 115 doctors, nurses and other licensed medical professionals, for their alleged participation in health care fraud schemes involving approximately $1.3 billion in false billings.

Of those charged, over 120 defendants, including doctors, were charged for their roles in prescribing and distributing opioids and other dangerous narcotics. Thirty states participated in the arrests.

Generally, the defendants were charged with aggressively targeting schemes to bill Medicare, Medicaid, and TRICARE for “medically unnecessary prescription drugs and compounded medications that often were never even purchased and/or distributed to beneficiaries. The charges also involve individuals contributing to the opioid epidemic, with a particular focus on medical professionals involved in the unlawful distribution of opioids and other prescription narcotics, a particular focus for the Department.