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The whistleblower attorneys at Goldberg Kohn are committed to fighting fraud against the government and protecting the rights of whistleblowers. Below are summaries of recent developments pertaining to whistleblower, qui tam, and False Claims Act actions throughout the United States.

Are Spinal Fusions Tainted By Fraud?

Billions of dollars are spent each year on unnecessary medical procedures. In fact, a 2012 report by the Institute of Medicine estimated that $750 billion—about 30 percent of all health spending in 2009—was wasted on unnecessary medical procedures or services. Some of the most common unnecessary medical procedures include Cesarean section births before 39 weeks, MRIs, and CT scans.

Spinal fusions have now begun to climb the list of most common medically unnecessary procedures. According to an article in the Washington Post, more than 465,000 spinal fusions were performed in the United States in 2011, but some experts estimate that as many as half of them were not medically necessary. The rate of spinal fusion surgery has increased six-fold in the United States over the past 20 years, with the expensive procedure now more common than hip replacement surgeries. Although medical advances might explain the reason for some of the additional surgeries, a Washington Post review of 125,000 patient records shows that approximately half of the spinal fusions performed in Florida were on patients that should not routinely be treated with spinal fusion.

In some cases, unnecessary medical procedures are performed as a result of patient demands or inadequate medical training, but in some situations, unnecessary medical procedures are performed in connection with a scheme to commit healthcare fraud. For instance, an independent review of Dr. Federico C. Vinas – a surgeon with Halifax Health – revealed that the hospital paid him hundreds of thousands in incentive pay and that nine out of every ten spinal fusions Vinas performed were medically unnecessary.

As we have reported, Halifax Health has been accused of significant health violations, as well. In 2009, a former compliance official at the hospital filed a whistleblower lawsuit alleging that the hospital was offering kickbacks to its doctors, improperly admitting patients, and performing unnecessary spinal surgeries. The Justice Department joined the case in 2011 and, in June, filed a motion for partial summary judgment, in which it asked for $102.8 million in damages and an additional $250 million to $500 million in penalties.

Owner of In-Home Care Company Sentenced to Two and Half Years in Jail

The owner of AdLife Healthcare Inc. – an in-home care company for elderly and disabled individuals – was recently sentenced to two and a half years in jail after pleading guilty on October 31 to charges of False Claims Act violations, larceny, and conspiracy. In addition to Sharon Richardson’s jail time, AdLife was also ordered to pay $3.3 million in restitution. The charges were filed in connection with an investigation by the Massachusetts Attorney General’s Office, which revealed that AdLife routinely billed MassHealth for services that were not rendered, including billing for deceased patients and for individuals who had never received services.

Government Intervenes in False Claims Act Lawsuit against USIS

The government has decided to intervene in a lawsuit filed against United States Investigations Services LLC (USIS) by Blake Percival, one of its former employees. The lawsuit is filed under the False Claims Act and accuses USIS of failing to perform quality control reviews in connection with its background investigations for the U.S. Office of Personnel Management (OPM).

Axway Agrees to Pay $6.2 Million to Resolve False Claims Act Allegations

Axway, Inc. has agreed to pay the United States $6.2 million to settle allegations that it provided the General Services Administration (GSA) with defective pricing information in order to obtain and maintain a GSA Multiple Award Schedule (MAS) contract. The lawsuit, which was filed under the False Claims Act, accuses Axway of providing false pricing information in order to sell software licenses and related services to federal agencies at inflated prices. Pursuant to the settlement agreement, the whistleblower will receive $1,178,000 for his role in the lawsuit.

Hefty Punishments Imposed on Owners of Diabetic Supply Company

The owners of Global Medical Direct, LLC – a Kansas-based mail-order diabetic supply company – have agreed to pay $7 million to settle allegations that they submitted false claims to Medicare and Tricare. The company’s owners, Robert Shea and Mark Franz, also agreed to pay an additional $5 million from the sale of the companies’ assets and to 20-year exclusions from participation in any federal healthcare program.

According to the lawsuit, Shea and Franz allegedly caused the company to enter into numerous marketing contracts with insurance brokerage and other companies that had customer bases likely to have a high percentage of diabetes patients and, subsequently, paying these companies based on the number of patients referred for diabetic supplies – in violation of the Anti-Kickback Statute which prohibits payment or receipt of remuneration for patient referrals.

Miami Doctor Receives “Slap on the Wrist” for Health Care Accusations

Fernando Mendez-Villamil – the Miami psychiatrist who came under fire recently for writing bogus prescriptions – has walked away from the allegations with a “slap on the wrist,” according to Sen. Charles Grassley (R-Iowa). Mendez-Villamil has been accused of writing prescriptions for Medicaid patients at an astonishing rate of 150 a day, seven days a week. Despite the startling findings of the Florida Department of Health that he “inappropriately prescribed medications at an inordinate rate and failed to meet professional standards,” Mendez-Villamil remains a licensed physician, incurring minor fines of only $15,000.  Although Mendez-Villamil also agreed to reimburse the state $22,228 for the costs of the investigation, and to complete a course in “quality medical record keeping,” Sen. Grassley has said that “the state medical board’s punishment would fail to deter future abuses of taxpayer-funded healthcare programs such as Medicaid.”

Please contact us at (312) 863-7222 if you would like to learn more about any of the aforementioned whistleblower news updates or would like to schedule a free, confidential appointment with one of our nationally recognized whistleblower attorneys.