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The highlights from the week's whistleblower news include three False Claims Act settlements with hospitals for billing irregularities, two of which were accused of unnecessarily admitting patients to the hospital to take advantage of higher reimbursement rates.

The Department of Justice announced a $4.9 million settlement with St. Joseph's Medical Center to resolve civil liability under the False Claims Act for admitting patients to the hospital unnecessarily. Specifically, the hospital "admitted patients for short stays – typically one or two days – that were not warranted by the patient’s medical condition, and thereby generated a larger reimbursement than was proper for each patient." Stuart F. Delery, Principal Deputy Assistant Attorney General of the Justice Department’s Civil Division, said: "The improper admission of patients for the purpose of obtaining increased reimbursement is a significant drain on the resources of federal and state healthcare programs," and that the recovery from St. Joseph's "reflects the Department’s continuing efforts to safeguard federal funds."

St. Joseph's Medical Center previously paid $22 million to resolve allegations of Anti-Kickback Statute violations associated with Dr. Mark Midei, who placed unnecessary stents in cardiac patients.

St. Luke's-Roosevelt Hospital Center agreed to pay $2.325 million to resolve allegations that it improperly billed Medicare and Medicaid for out-patient services provided at its mental health clinics. Preet Bharara, the United States Attorney for the Southern District of New York, announced the settlement, referring to St. Luke's conduct as "billing shenanigans."  Specifically, the complaint and settlement agreement describes St. Luke's conduct as follows: "ST. LUKE’S double-billed the United States for psychiatric services provided by the Hospitals’ physicians at SLR, one of its out-patient mental health clinics, in two ways: (1) the Hospital sought and received reimbursement pursuant to Medicare for non-reimbursable costs relating to outpatient psychiatric visits conducted by SLR during the period 1999 to 2002; and (2) the Hospital billed out-patient psychiatric services to Medicaid as a rate-based service, which included the care provided by the physician and all other related costs. At the same time, SLR billed the Government on a fee-for-service basis for the same care provided by the physician. As a result, ST. LUKE’S received Medicare and Medicaid payments that it was not entitled to receive."

As we previously discussed, Judge Terrence Boyle, a United States District Court judge sitting in Raleigh, North Carolina has been reluctant to approve a proposed $8 million settlement agreement reached between federal officials and WakeMed, a large non-profit hospital in Wake County accused of violating the False Claims Act by unnecessarily admitting patients to the hospital as inpatients, rather than simply treating and discharging those patients. After several hearings, Judge Boyle ultimately approved the settlement, explaining that further prosecution, or an increased settlement payment, would jeopardize the hospital's ability to serve the patients in the community. Judge Boyle's reluctance to sign-off on the agreement, however, is a signal that "slap-on-the-wrist" settlements will not necessarily be rubber-stamped by the courts.

Shire PLC, an Irish pharmaceutical manufacturer, announced that it agreed to pay more than $57.5 million to resolve a federal investigation into Shire's U.S. sales and marketing practices related to Adderall XR, Vyvanse and Daytrana. The specific allegations against Shire are not yet public.

On February 8, 2013, CMS issued a final rule for the Physician Payments Sunshine Act, pursuant to which drug companies are obligated to collect and report data regarding gifts and payments given to physicians and teaching hospitals. The data collection obligations do not begin until August 1, 2013, the first reports are not due until March 31, 2014, and the data will not be publicly available until September 30, 2014. The law is designed to increase the transparency of financial relationships between physicians and manufacturers. Improper payments by manufacturers to physicians have long been the subject of False Claims Act prosecutions and settlements.